[00:00:06] Speaker 03:
Good morning.

[00:00:13] Speaker 00:
Good morning and may it please the court.

[00:00:15] Speaker 00:
I'd like to ask that three minutes of my time be reserved for rebuttal.

[00:00:18] Speaker 00:
And I'd also like to ask the court's indulgence for my voice.

[00:00:21] Speaker 00:
I was at a restaurant two days ago where I was having a shout across the table to be heard, and it left me with a bit of coarseness.

[00:00:29] Speaker 00:
So I apologize for that.

[00:00:31] Speaker 00:
To begin though, I wanted to point out that basically our brief presents you with two decisional paths.

[00:00:39] Speaker 00:
One is finding that the commission erred back in 2003 by finding that we shouldn't be, my client shouldn't have been given extra time to come into compliance with the financial obligations that it had.

[00:00:53] Speaker 00:
If you agree with us on that, that would obviously move the need to go into the consequences of a default, which is what a lot of the rest of the brief is addressing.

[00:01:03] Speaker 00:
This morning, unless you direct me otherwise, I'm planning to focus on the default provisions, not because I don't think the original point is without merit.

[00:01:12] Speaker 00:
And certainly there's a lot of points we made that show that the commission deviated from its own precedence in not granting us an extension of time.

[00:01:22] Speaker 00:
But I'm also mindful of the fact that the court is sometimes reluctant to go back 15 years and try to set everything back to where it was then, which would be a little difficult in this case, but not impossible because the licensees who acquired these licenses after the commission canceled them were aware that there was an appeal pending and therefore they took those licenses knowing that there was the possibility that this could happen.

[00:01:45] Speaker 00:
So having said that, I'll turn to the default situation.

[00:01:49] Speaker 00:
And there are the two things that we really have to address our two basic questions.

[00:01:54] Speaker 00:
Does GLH owe the FCC any money?

[00:01:57] Speaker 00:
And does the FCC owe GLH any money?

[00:02:01] Speaker 00:
Two different things.

[00:02:03] Speaker 00:
The answer to the first question should be kind of an easy one, because it seems like the FCC and we agree.

[00:02:10] Speaker 00:
And I say that by turning to the touchstone of the 1996 opinion matter,

[00:02:14] Speaker 00:
which lays out very succinctly, I think, the commission's policy.

[00:02:18] Speaker 00:
And when I say the commission, even though that letter was issued by the FCC's general counsel and the wireless communications bureau chief, the full commission has since subscribed to that as representing the policy of the FCC.

[00:02:32] Speaker 00:
So the fact that it was done by a delegated authority, I don't think we have to worry about here.

[00:02:39] Speaker 00:
letter, the FCC took the position, which I think was very well founded in just the common law, the UCC, the federal debt collection standards and everything else, that the equitable principle that applies in a situation where you've got a defaulting debtor and a collection on the collateral, that the

[00:03:02] Speaker 00:
Funds received by the FCC and the re-auction of the collateralized asset, or in this case the licenses, should be offset against the debt that the debtor owed.

[00:03:12] Speaker 03:
So I'm clear.

[00:03:14] Speaker 03:
What is the status of matters?

[00:03:16] Speaker 03:
Is your client's request just pending?

[00:03:21] Speaker 03:
Because the FCC says, well, it hasn't taken any enforcement or debt collection action.

[00:03:28] Speaker 03:
So these arguments are premature.

[00:03:32] Speaker 00:
Well, that's what they're saying, but the FCC rules actually say that when you cancel a license, which they did in 2003, they're supposed to initiate promptly debt collection proceedings.

[00:03:43] Speaker 03:
So they haven't done that, but that's not your argument.

[00:03:47] Speaker 03:
That's what I'm trying to understand here.

[00:03:49] Speaker 03:
What are you looking for?

[00:03:51] Speaker 03:
You're looking for, I mean, to put it in its simplest form, a piece of paper that says, in light of the re-auction proceeds, your client

[00:04:02] Speaker 03:
no longer owes $6 million.

[00:04:08] Speaker 00:
Yes.

[00:04:08] Speaker 00:
And the reason I'm saying that is the opinion letter does speak about the debt collection proceedings, but it doesn't say that the offset principle only gets applied at the very end of the line.

[00:04:19] Speaker 00:
I mean, in my view, there's no need for debt collection proceedings because there's no longer any debt.

[00:04:24] Speaker 00:
It's been offset.

[00:04:25] Speaker 03:
But you want some acknowledgement in writing because

[00:04:31] Speaker 03:
What I'm trying to understand is how is that adversely affecting your client?

[00:04:36] Speaker 00:
Well, we've for the last 15 years, we've been under a cloud where the commission is.

[00:04:40] Speaker 03:
But what does that mean?

[00:04:42] Speaker 00:
Well, it means that we, you know, we've got a potential $6 million liability that's hanging out there that shouldn't be there.

[00:04:49] Speaker 03:
I understand that.

[00:04:50] Speaker 03:
But, you know, it's like you own your house and you have a mortgage and the mortgage could be, you know, called or something like that.

[00:04:58] Speaker 03:
Is your client unable to do business?

[00:05:01] Speaker 00:
No, I wouldn't say well, our client couldn't continue to do business on licensed areas.

[00:05:06] Speaker 03:
Right, but it has two of the six licenses.

[00:05:10] Speaker 00:
All right.

[00:05:10] Speaker 00:
Four of the six.

[00:05:13] Speaker 03:
No.

[00:05:13] Speaker 00:
It has?

[00:05:14] Speaker 00:
Oh, I'm sorry.

[00:05:14] Speaker 00:
Yes, it has two of the six.

[00:05:15] Speaker 03:
Yeah, it paid what was owed on the two.

[00:05:18] Speaker 00:
I'm sorry.

[00:05:18] Speaker 00:
Yes, that's right.

[00:05:19] Speaker 03:
So it's continuing to function.

[00:05:23] Speaker 03:
I understand the cloud, but I'm just trying to understand what is the

[00:05:27] Speaker 03:
on the ground impact of the cloud?

[00:05:32] Speaker 00:
Well, first of all, I should say the client has since sold those two licenses, so it doesn't have those two licenses anymore either.

[00:05:39] Speaker 00:
But here's the concern.

[00:05:40] Speaker 00:
The FCC seems to be very coy or cagey about this whole thing.

[00:05:45] Speaker 00:
I mean, when they issued their 2010 order, I actually called the FCC and I said, so does this mean that we don't owe you anything?

[00:05:52] Speaker 00:
Because you seem to be saying you're subscribing to the 1996 opinion letter.

[00:05:57] Speaker 00:
And I was told, Don, we're not that subtle.

[00:06:00] Speaker 00:
So I mean, it sort of seems like the commission has something that's up in the air that I don't know what it is, but the equitable principle that they say they're applying under the 96th opinion letter should remove us from any debt obligation.

[00:06:15] Speaker 00:
And this can't just go on indefinitely.

[00:06:19] Speaker 00:
I actually had to file a petition for mandamus for the commission to even issue the last order that's now under review.

[00:06:28] Speaker 03:
So if we were to grant some part of your commission, what would you be asking in terms of what the commission has failed to do?

[00:06:41] Speaker 00:
I'd be asking them to confirm or to declare or to state that there's no longer any money due from GLH because of the offsetting principle that was espoused in the opinion letter.

[00:06:52] Speaker 04:
Mr. Evans, is there not a process by which you can trigger

[00:06:58] Speaker 04:
the clearing up of this cloud.

[00:07:00] Speaker 04:
In other words, you could petition to compromise this punitive debt.

[00:07:05] Speaker 04:
And obviously, I understand your position that you don't think there is or can be a debt.

[00:07:10] Speaker 04:
But the commission has clearly taken the position that there is.

[00:07:12] Speaker 04:
That's what you claim harms your client.

[00:07:17] Speaker 04:
Is there not a way to trigger a decision on this on your part?

[00:07:22] Speaker 00:
Well, we did petition for debt compromise back in 2003, which the commission

[00:07:27] Speaker 00:
Well, we petitioned for a waiver of the rules, and the commission denied that.

[00:07:31] Speaker 00:
We petitioned for a debt compromise, and I think they dismissed that.

[00:07:36] Speaker 00:
So by the time they dismissed it, it was clear that they had gotten more money in the auction than we owed, and therefore I thought there was really no need for a debt compromise because there was no longer any more debt.

[00:07:49] Speaker 00:
I don't know that there's any specific way we can trigger or force the commission to initiate debt collection proceedings.

[00:07:57] Speaker 04:
Do you have a record, say, for where you petitioned for debt compromise?

[00:08:00] Speaker 04:
I didn't.

[00:08:01] Speaker 00:
Yeah, there's a copy of it in the Joint Appendix.

[00:08:06] Speaker 03:
I thought what the Commission did then, it said your debt compromise mission was premature.

[00:08:15] Speaker 01:
Well, they did say that.

[00:08:16] Speaker 01:
Yeah.

[00:08:18] Speaker 01:
So maybe it's not premature any longer.

[00:08:20] Speaker 01:
I thought the idea was that it was premature at that time.

[00:08:22] Speaker 01:
Right.

[00:08:25] Speaker 01:
repetition for a debt compromise, and then you would get the resolution that you're asking for, which is the determination of whether money is still owed.

[00:08:34] Speaker 00:
Well, I mean, I suppose we could do that, but in my view, there was no longer a need for debt compromise because there was no longer a debt, is the way I view it.

[00:08:42] Speaker 01:
So what if you could?

[00:08:43] Speaker 01:
Let's just, we can ask agency counsel about this, but let's suppose their position is you can seek, you can file a petition for debt compromise now and you'll get the very resolution that you're asking for, which is a determination of whether a debt is still owed.

[00:08:57] Speaker 00:
I hope that we could do that, but I don't know that.

[00:09:00] Speaker 00:
I mean, it seems to me that the clearest way to do it would be for the commission to just respond to the petitions that we filed to date, which raised this very issue.

[00:09:08] Speaker 00:
Do we owe any money?

[00:09:10] Speaker 00:
And they could just decide that in the context of the pleadings that they've had for the last 10 years.

[00:09:14] Speaker 03:
So along the lines that my colleagues have been asking you, are there any rules that you know of that the FCC has promulgated that directly address this precise situation?

[00:09:27] Speaker 00:
No.

[00:09:28] Speaker 00:
There are none that I know.

[00:09:29] Speaker 03:
Yeah.

[00:09:31] Speaker 00:
OK.

[00:09:31] Speaker 00:
So I mean, as I say, it seems like we and the FCC are sort of on the same page as far as this offset goes.

[00:09:40] Speaker 00:
The trickier one is the answer to the second question that I posed is does the FCC owe GLH any money?

[00:09:49] Speaker 00:
And in that case we can still use the touchstone of the 1996 opinion letter because there the FCC very elegantly laid out how it works with the UCC being sort of subsumed into the federal common law and then applied to the FCC's proceedings and court proceedings that are related to that.

[00:10:10] Speaker 00:
And the FCC there, you know, basically said that the UCC would normally or generally be applied to debtor relations, you know, regarding installment payments unless there was a conflicting federal interest.

[00:10:25] Speaker 00:
And what the commission found in 1996 was the conflicting federal interest was the obligation that set forth in the Communications Act that auction proceeds have to go into the federal treasury.

[00:10:36] Speaker 00:
That, they said, precluded them from paying over to us the excess proceeds of the re-auction.

[00:10:42] Speaker 00:
But that objection doesn't really hold any water for three reasons, three very clear reasons.

[00:10:47] Speaker 00:
First of all, the paying out of the money to GLH would be part of the auction implementation process, which Section 307J8 specifically allows the Commission to use proceeds of the auction for.

[00:11:01] Speaker 00:
Secondly, back in 1990,

[00:11:04] Speaker 00:
Seven, when the Commission handled the C-block relief situation, we described in our brief where there were companies that had overbid by hundreds of millions of dollars on their licenses.

[00:11:16] Speaker 00:
The Commission granted them a variety of relief options, two of which, I believe, required the Treasury to give them refunds of money that they had paid in to the Treasury.

[00:11:26] Speaker 00:
So obviously the Commission then had no problem taking money out of the Treasury to handle

[00:11:31] Speaker 00:
an auction relief situation, and there's no reason why that couldn't be applied here, too, that I know of.

[00:11:37] Speaker 00:
And thirdly, we suggested to the Commission, if you've got to worry about the cash, we will take auction credits in lieu of cash, which is something that the Commission has done in the past.

[00:11:46] Speaker 00:
And in a way, that's kind of a similar concept to the offset that the Commission seems to think is okay.

[00:11:52] Speaker 00:
It doesn't run afoul of Section 309J8, because it's not actually taking money out of the Treasury.

[00:11:59] Speaker 00:
It's just giving you a credit.

[00:12:01] Speaker 00:
So all of those reasons suggest that under the 1996 FCC opinion letter, we really should be entitled to receipt of the money for the overage and the re-option of those licenses.

[00:12:15] Speaker 04:
All right.

[00:12:17] Speaker 04:
Mr. Owens, I had a question about – on JA-12 and the – in the agreement, the security

[00:12:25] Speaker 04:
The FCC says that your client contracted away any right to offset or surplus in this paragraph D, debtor has no right or interest in any monies or evidence of indebtedness given to the commission by a subsequent licensee of the spectrum.

[00:12:46] Speaker 04:
And it goes on to say those are property of the treasury.

[00:12:49] Speaker 04:
And your interpretation of that is?

[00:12:53] Speaker 04:
why that isn't a waiver of any of the interest that you have in offset and or surplus?

[00:12:59] Speaker 00:
My interpretation is it certainly does say that, but if you look down at the bottom of the page there in section I, it mentions that the Commission may exercise any remedies of a secure party under the Uniform Commercial Code.

[00:13:12] Speaker 00:
And as we've – so the Commission was, in the first place, specifically placing itself under the aegis of the UCC.

[00:13:19] Speaker 00:
But also, if you hearken back to the 1996 opinion letter,

[00:13:23] Speaker 00:
That letter indicates that the UCC becomes part of the federal common law that should be applied in any event.

[00:13:30] Speaker 00:
And under the UCC, unless there's a conflicting federal interest, and I don't know of any that would apply to this, as I just said, the commission should apply the provision of the UCC that does not permit waiver.

[00:13:43] Speaker 00:
It absolutely precludes people from either party from agreeing to what's the language that Judge Biller cited there in paragraph D.

[00:13:52] Speaker 00:
I mean, my take on this is what the Commission is doing is outrageous.

[00:13:56] Speaker 00:
If Moe's Quickie Lung Shop up the street here tried to do this, they would be sanctioned by somebody, and here you've got a federal agency taking an outrageous advantage of a debtor in contrast to the UCC, and it's a federal agency that's doing that.

[00:14:17] Speaker 01:
Just one quick follow-up, but just so under your rationale, if a license holder starts its installment payment and then on day one of the arrangement, suppose that some exogenous factor just dramatically raises the value of the spectrum, and so it goes all of a sudden spikes and it's worth 10 times what it was worth before, then the installment payer would just have the incentive to default.

[00:14:44] Speaker 00:
In that situation, I think the installment payer would sell it to somebody else for the highly increased value.

[00:14:51] Speaker 01:
Is there a free ability to sell it?

[00:14:53] Speaker 00:
Yeah, there's a free ability to sell it.

[00:14:56] Speaker 00:
If you sell it to somebody that's not in the eligible category that's entitled to installment payments, you have to pay a penalty.

[00:15:03] Speaker 00:
But you can freely sell it, yes.

[00:15:06] Speaker 01:
And the resale is not subject, there's no FCC oversight of the resale?

[00:15:11] Speaker 00:
Yeah, you have to, as with any assignment of a license, you have to file an application with the FCC, and the FCC has to approve it.

[00:15:17] Speaker 01:
But does this happen actually in the marketplace, that when the value goes way up, then somebody resells it, and the FCC authorizes it, and then you get, that happens all the time?

[00:15:25] Speaker 00:
It happens all the time.

[00:15:26] Speaker 00:
I've done it myself many times.

[00:15:28] Speaker 00:
I see.

[00:15:28] Speaker 03:
Yes.

[00:15:29] Speaker 03:
All right, why don't we hear from the commission.

[00:15:31] Speaker 03:
Thank you.

[00:15:41] Speaker 02:
Thank you, Your Honors, and may I please report David Gossett from the FCC.

[00:15:46] Speaker 02:
Let me start where Mr. Evans also started.

[00:15:50] Speaker 02:
Section 47.1915 of the FCC's regulations, which is part of the debt collection proceedings in the FCC regulations, specifically says the commission will consider a request submitted by the debtor to compromise the debt.

[00:16:07] Speaker 03:
Taking a step back, it is... So, didn't the record show that that was requested?

[00:16:15] Speaker 02:
Your Honor, GLH did submit a debt compromise request back in 2003.

[00:16:23] Speaker 02:
That request was returned without action because GLH failed to continue to press it.

[00:16:29] Speaker 02:
That request is not before the court.

[00:16:31] Speaker 03:
No, but I thought the Commission said it was premature.

[00:16:33] Speaker 02:
In this order, it said it was premature to consider any question about debt collection because the debt collection follows from the cancellation of the license.

[00:16:43] Speaker 02:
The actual request for debt compromise was a separate commission proceeding.

[00:16:49] Speaker 02:
He filed a debt compromise request that was returned without action.

[00:16:53] Speaker 02:
He didn't seek any further review of that.

[00:16:55] Speaker 02:
It's not before the court.

[00:16:57] Speaker 03:
So what should he do in your view?

[00:16:59] Speaker 02:
He should file a petition for debt compromise with the commission under 1.1915.

[00:17:03] Speaker 03:
And does he pay a fee?

[00:17:05] Speaker 02:
No, he does not.

[00:17:06] Speaker 03:
So all he has to do is refile this piece of paper he filed before.

[00:17:12] Speaker 02:
Yes, that would certainly start the process.

[00:17:15] Speaker 02:
It's important to understand the debt is a debt.

[00:17:18] Speaker 03:
What do you mean start the process?

[00:17:20] Speaker 03:
Because his point is that under the regulations, you're supposed to start it immediately after the default.

[00:17:25] Speaker 03:
It hasn't been started for years.

[00:17:28] Speaker 03:
And your brief says it still hasn't been started.

[00:17:32] Speaker 02:
I said we have taken no action, or the brief says we've taken no action to collect the debt.

[00:17:36] Speaker 02:
We did send him a demand letter back in 2004, I believe, saying he owed, that under the terms of the security agreement, the debt had been accelerated and was due.

[00:17:49] Speaker 02:
That's not in the record because it's not part of this proceeding.

[00:17:53] Speaker 02:
This proceeding is simply an appeal, a petition for review from the denial of the waiver.

[00:17:58] Speaker 01:
So if he files a petition, can he file a petition for debt compromise now?

[00:18:03] Speaker 01:
Yes, there's no time limit on that.

[00:18:07] Speaker 02:
But it's important to understand that there are elaborate rules governing that.

[00:18:11] Speaker 02:
For example,

[00:18:13] Speaker 02:
only the attorney general has the right to compromise a debt for more than $100,000.

[00:18:17] Speaker 02:
So yes, we have stepped forth equitable principles in the Lynne Kennedy letter, and we've acknowledged those in our brief here, in the orders here, et cetera, saying that equity would ordinarily suggest that he should not, we shouldn't recover this money from him.

[00:18:34] Speaker 03:
Let me be clear, based on the record we have before us, this is somebody who paid faithfully

[00:18:40] Speaker 03:
for, what was it, seven years, had three years to go.

[00:18:43] Speaker 03:
And then the bank bellied up, as it were, through no fault of the petitioner.

[00:18:55] Speaker 03:
Let's just take that as an example for the moment.

[00:18:59] Speaker 03:
So he loses in the sense that his 2004 letter says he's in default.

[00:19:10] Speaker 03:
And the Commission then re-auctions, or not re-auctions, but I don't know what you call it.

[00:19:18] Speaker 02:
Auctions a new license for the same spectrum.

[00:19:21] Speaker 03:
Precisely.

[00:19:23] Speaker 03:
And it gets more than the debt.

[00:19:26] Speaker 03:
What is the Commission's standard operating procedure in that circumstance?

[00:19:33] Speaker 02:
I don't know if there's a standard operating procedure.

[00:19:36] Speaker 02:
This issue does not actually come up that frequently.

[00:19:39] Speaker 03:
I mean, realize- Why is that?

[00:19:40] Speaker 03:
That's what I'm trying to understand about the real world here.

[00:19:43] Speaker 03:
It's been 13 years, and I'm trying to understand what this cloud means.

[00:19:48] Speaker 03:
Does it mean anything?

[00:19:50] Speaker 03:
Is it just a cloud, defamable, has no real world?

[00:19:54] Speaker 03:
Or if this company were to seek either at an auction or through assignment,

[00:20:01] Speaker 03:
get new licenses, would it automatically be denied because of this cloud?

[00:20:07] Speaker 02:
The reason it's not common, Your Honor, is because the Commission only authorized installment payments for this brief period between 1994 and 1997.

[00:20:17] Speaker 02:
That's three years.

[00:20:18] Speaker 02:
But in three years, that's 20 years ago.

[00:20:21] Speaker 02:
So there are no current licenses where someone has an installment payment arrangement with the Commission.

[00:20:28] Speaker 02:
Those licenses all expired by the

[00:20:30] Speaker 02:
mid-2006, 2007.

[00:20:32] Speaker 02:
So there aren't any more and it's a very rare circumstance.

[00:20:37] Speaker 02:
This is the very tail end of the C-block auction.

[00:20:42] Speaker 02:
Your Honor, what the Commission held in the order before you was that it was appropriate to deny the waiver here.

[00:20:50] Speaker 02:
It was appropriate to deny the waiver because the Commission has routinely said that a company's business arrangements are not a reason for renting a waiver.

[00:21:02] Speaker 02:
They entered into a business contract that went south, but that happens all the time and that's not the Commission's fault.

[00:21:07] Speaker 02:
And the commission also explained that the entire process of the auction and the auction system depends on the party that values the license the most winning the auction.

[00:21:22] Speaker 03:
And if they don't pay the payments, they don't... I mean, the commission's view is, you know, I default on my mortgage, I lose my house, period.

[00:21:30] Speaker 03:
And it's had a very strict interpretation of the rule because I never should have bought this house I couldn't afford.

[00:21:37] Speaker 03:
All right, now we have a situation where the house I bought I could afford because I had solid security behind it.

[00:21:46] Speaker 03:
I had a bank.

[00:21:47] Speaker 03:
And then the bank goes belly up.

[00:21:49] Speaker 03:
The commission takes the same attitude, even though I've already built out I'm providing service to an underserved area.

[00:21:56] Speaker 03:
And as a result, and I don't know if this is actually what the record shows, but your brief doesn't dispute it,

[00:22:04] Speaker 03:
For seven years, this area did not get any service, or as the rubri says, competitive service.

[00:22:12] Speaker 02:
There was service.

[00:22:13] Speaker 02:
It was not competitive service.

[00:22:15] Speaker 02:
It was the primary carrier, but the main major market carrier.

[00:22:21] Speaker 02:
The commission has uniformly held that the build out is not an adequate reason.

[00:22:28] Speaker 03:
No, I understand, but what I'm trying to understand is,

[00:22:30] Speaker 03:
If the commission says we have this rule, we're going to interpret it strictly, we don't want to spend a lot of time fussing about this, you either pay or you don't pay on time, the full amount that's owed, end of discussion.

[00:22:42] Speaker 03:
So instead, it wants to litigate in court, it wants to have this elaborate debt collection compromise proceeding.

[00:22:52] Speaker 03:
So where do you spend your resources is what I'm trying to understand.

[00:22:56] Speaker 03:
He says, you know, you no longer have this installment program, so why are we belaboring this?

[00:23:02] Speaker 03:
And your position is, well, the only thing before us is the waiver.

[00:23:05] Speaker 03:
We ought to affirm and let any debt compromise or debt collection proceedings be handled in another 54 review.

[00:23:15] Speaker 02:
I'm not suggesting that the debt collection proceedings would be complicated or elaborate.

[00:23:20] Speaker 02:
I'm just suggesting that

[00:23:23] Speaker 02:
As rule 1.2110 suggests, the consequences of the cancellation of his license was that, of his failure to pay was the cancellation of the license and that he would be subject to debt collection proceedings.

[00:23:37] Speaker 02:
That's the conclusion that is before the court.

[00:23:40] Speaker 02:
I'm not denying

[00:23:42] Speaker 02:
Any of the equitable principles stated in the Len Kennedy letter, I'm not suggesting that I could stand here today and expect that we would seek to recover funds from him.

[00:23:54] Speaker 02:
I don't know.

[00:23:55] Speaker 02:
As I said earlier, for example, to compromise this debt, we'd need the consent of the attorney general.

[00:24:02] Speaker 02:
And we'd have to actually be engaged in debt collection discussions.

[00:24:07] Speaker 02:
Mr. Evans hasn't sought to

[00:24:09] Speaker 02:
raise those, he's instead been litigating this question and litigating the question of the validity of the waiver when the denial of the waiver was entirely consistent with every precedent of the commission.

[00:24:22] Speaker 03:
We have the Department of Justice in here all the time and litigation starts and counsel for the department calls up counsel for the other side and says, do you really want to litigate this?

[00:24:31] Speaker 03:
Can't we resolve this issue?

[00:24:34] Speaker 03:
The case goes away.

[00:24:37] Speaker 03:
Nothing to bar the FCC from doing that either.

[00:24:40] Speaker 02:
Your Honor, we haven't sought to collect this debt.

[00:24:43] Speaker 02:
So it's not that we see there any pressing need for any of this.

[00:24:48] Speaker 04:
But isn't that on you?

[00:24:49] Speaker 04:
I'm just saying, isn't that on you that you haven't sought to collect the debt?

[00:24:56] Speaker 04:
I thought there was a duty to do so promptly.

[00:24:59] Speaker 02:
We have not done so because of the pendency of this litigation, which challenges the question of the existence of the debt.

[00:25:09] Speaker 02:
And so once it's established that there is in fact a debt, then we can proceed with any debt collection if necessary.

[00:25:18] Speaker 01:
And one of your answers, I think you said, and I just want to make sure,

[00:25:22] Speaker 01:
I'm following the process, that debt collection proceedings would have to be going on in order to get a determination.

[00:25:28] Speaker 01:
But I thought the petition for debt compromise essentially allows for an anticipatory determination.

[00:25:34] Speaker 01:
So if they file a petition for debt compromise, wouldn't they in the ordinary course get a resolution of whether a debt is owed?

[00:25:42] Speaker 01:
Even if you haven't initiated debt collection proceedings and what they want to say is,

[00:25:47] Speaker 01:
We just want to eliminate the possibility that you could initiate debt collection proceedings because we don't think there's a debt.

[00:25:53] Speaker 01:
And the way we're going to get that resolved is we're filing this petition for debt compromises.

[00:25:57] Speaker 02:
I'd welcome the filing such a petition.

[00:25:59] Speaker 02:
My point is that the 2003 petition for debt compromise was returned without action.

[00:26:03] Speaker 02:
And he didn't seek further review of that.

[00:26:06] Speaker 02:
He didn't file an application for review or reconsideration of that.

[00:26:09] Speaker 02:
It's a separate commission proceeding.

[00:26:11] Speaker 02:
He can file that petition today and, well, after the furlough,

[00:26:15] Speaker 02:
And then we could proceed on it.

[00:26:20] Speaker 03:
So you are making a statement on the record that all he needs to do is to file, according to that rule you cited to us, this petition for debt compromise based on the FCC's 2004 letter that his client owes this debt.

[00:26:47] Speaker 02:
Your Honor, I'm suggesting that would start the debt collection process in which we could determine whether to compromise the debt and to, for example, to offset the monies we obtained.

[00:27:03] Speaker 02:
I'm not in a position to say that the Commission would do so.

[00:27:06] Speaker 02:
I can just point to the Commissions.

[00:27:08] Speaker 03:
So, Counsel, is that a yes?

[00:27:11] Speaker 02:
Your Honor, I'm not sure what you meant by all he needs to do.

[00:27:16] Speaker 02:
My question was not procedurally to tee up the issue that he's trying to crack.

[00:27:22] Speaker 03:
That's what the question was, Counsel.

[00:27:24] Speaker 03:
It didn't talk about the result.

[00:27:26] Speaker 02:
In that case, Your Honor, I was just trying to be very careful.

[00:27:29] Speaker 03:
I'm very clear about that.

[00:27:31] Speaker 02:
Okay, yes, that's all he needs to do, Your Honor.

[00:27:32] Speaker 03:
Because I wanted to get on the record exactly

[00:27:35] Speaker 03:
what the FCC is representing needs to be done to resolve this matter.

[00:27:42] Speaker 02:
That's all he needs to do, Your Honor.

[00:27:47] Speaker 02:
Any further questions?

[00:27:47] Speaker 04:
I have a question about how do you respond to the position that the Commission takes about cancellation.

[00:27:55] Speaker 04:
This is written into the terms of the agreement, and cancellation has no procedural right to a hearing.

[00:28:06] Speaker 04:
And Mr. Evans raises the prospect that if that's true, the FCC can condition any licensing grants on compliance with rules and then create and run around the hearing requirement.

[00:28:18] Speaker 04:
And do you have a limiting principle on that?

[00:28:22] Speaker 02:
Sure, Your Honor.

[00:28:24] Speaker 02:
Section 312A sets forth the situations where a hearing is needed.

[00:28:31] Speaker 02:
right around one of those proceedings.

[00:28:35] Speaker 02:
But if one looks at those proceedings, they're all questions that involve questions of, for example, willfulness, or they're the kinds of things about which you would need a hearing.

[00:28:44] Speaker 02:
They're not a question about

[00:28:49] Speaker 02:
Did something happen?

[00:28:50] Speaker 02:
The only question here for purposes of the cancellation is did a payment get made on July 31st?

[00:28:56] Speaker 02:
It didn't.

[00:28:58] Speaker 02:
And this is of course what this court held in Morris.

[00:29:06] Speaker 02:
If the court has no further questions, I ask that the petition be reviewed.

[00:29:15] Speaker 03:
Thank you.

[00:29:15] Speaker 03:
Council for Petitioning.

[00:29:17] Speaker 00:
Thank you, Your Honor.

[00:29:20] Speaker 00:
One point I would like to make in response to a question that you raised with me earlier, which my associate pointed out, as to what current negative effects does our status in limbo have.

[00:29:30] Speaker 00:
There's some question as to whether the Commission considers GLH to be a current defaulter, which prevents you from participating in any lottery at all.

[00:29:41] Speaker 00:
I don't know whether we're a current defaulter or not, because I don't know whether there's a debt that's owed or not.

[00:29:46] Speaker 00:
So we're in the status of limbo.

[00:29:48] Speaker 03:
Well, let me ask you, you're not denying you got this 2004 letter saying you owe this money?

[00:29:53] Speaker 00:
I was surprised to hear that.

[00:29:55] Speaker 00:
I'm unaware of it.

[00:29:56] Speaker 03:
Oh, you're unaware of that letter?

[00:29:57] Speaker 00:
Yeah, yeah.

[00:29:58] Speaker 03:
I see.

[00:29:59] Speaker 00:
And I've been involved in the case since 2002, so I'm not saying it didn't happen.

[00:30:03] Speaker 03:
Well, where does your uncle represent that there is such a letter?

[00:30:06] Speaker 03:
He represented that to the court.

[00:30:09] Speaker 00:
I'm not saying it didn't happen, but I'm completely unaware of it.

[00:30:13] Speaker 03:
Any obstacle to your proceeding to file this debt compromise petition?

[00:30:22] Speaker 00:
Well, I don't think that there's an obstacle.

[00:30:24] Speaker 00:
The problem, though, is we're still left with the question of what about the payment of the overages, because I don't think the commission, at least based on what they've said in the brief and what they said in the two orders that are under review, they said you're not entitled to get the overages.

[00:30:39] Speaker 00:
So if we went in for a debt-compromised petition, I don't think they're going to say, yeah, you don't owe us anything, and here's $2 million that we owe you because... Right, but you teed it up with two questions.

[00:30:49] Speaker 01:
One is whether you owe them, and the second is whether they owe you.

[00:30:52] Speaker 01:
On the first part of it, whether you owe them, it sounds like there's a procedure available to make that determination.

[00:30:58] Speaker 00:
They're saying it is.

[00:30:59] Speaker 00:
I mean, it seems to me the procedure that was available was we challenged their ruling that we owed the money, and that's one of the issues that's before the court now.

[00:31:08] Speaker 01:
Yeah, I mean, there's certainly ways that that could be resolved in this case, to your favor.

[00:31:12] Speaker 01:
I'm not saying that there's not.

[00:31:13] Speaker 01:
I'm just saying that there's also a way in which you can get the determination that you're looking for.

[00:31:18] Speaker 00:
Yeah, and frankly, I'd be looking for the same answer that Judge Rogers was asking for, was, well, what would you do if they filed such a thing?

[00:31:26] Speaker 00:
Apparently, the only equity that's involved here, according to the 1996 opinion letter, is did the commission receive offsetting funds from the re-option of the license?

[00:31:36] Speaker 00:
That's just an actual fact.

[00:31:39] Speaker 00:
And if that's the equitable principle that allows us to not owe the commission any money, then it shouldn't be anything that has to be argued about.

[00:31:48] Speaker 03:
Anything further?

[00:31:49] Speaker 00:
No, that's all your honor.

[00:31:49] Speaker 00:
Thank you.

[00:31:50] Speaker 03:
Thank you.

[00:31:50] Speaker 03:
We'll take the case on your advisory.