The Third Circuit Court of Appeals handed Council Tree Communications and its copetitioners a partial victory in the company’s four-year legal fight against the FCC, as the court vacated key aspects of the “designated entity” (DE) rules that were adopted by the FCC as a prelude to the Advanced Wireless Services (AWS) auction in 2006. The DE rules at the center of the Third Circuit case were also applied to the FCC’s auction of 700 MHz wireless licenses that netted a record $18.9 billion in winning bids in 2008. Although the three-judge panel agreed with the petitioners’ contentions that the rules in question were arbitrary and capricious, the panel rejected the appellants’ request to invalidate the results the AWS and 700 MHz auctions, reasoning that such a step would create massive disruption and uncertainty throughout the wireless market. In its 53-page opinion, the court concluded that the FCC failed to provide adequate time for public notice and comment, as required by the Administrative Procedure Act (APA), on rules that ban from DE eligibility entities that have “an impermissible material relationship” with parties that intend to lease or resell more than 50% of the DE’s spectrum capacity. The court also said the FCC fell short on its APA obligations with respect to DE rules that double the unjust enrichment period (i.e., the period during which the auction winner is precluded from selling or transferring control of its license without penalty) from five years to ten. The judges determined, however, that the FCC did provide adequate notice under the APA in adopting rules that declare a DE to have an “attributable material relationship” with another party if the DE has an agreement to lease or resell at least 25% of its spectrum capacity to that entity. Officials of the FCC and the wireless industry also welcomed the court’s pronouncement that it would not rescind the results of the AWS and 700 MHz auctions as that action “would involve unwinding transactions worth more than $30 billion, upsetting what are likely billions of dollars of additional investments made in reliance on the results, and seriously disrupting existing or planned wireless service for untold numbers of customers.” Breathing a sigh of relief, a spokesman for T-Mobile USA, the top bidder in the AWS sale, applauded the ruling as “clearly the right decision for American consumers and competition.” While Council Tree managing director George Laub affirmed, “we are pleased with the clear-cut ruling that the court has made our favor,” Council Tree and its co-petitioners Bethel Native Corp. and the Minority Media Telecommunications Council left open the possibility of an en banc appeal or a petition to the U.S. Supreme Court concerning the auction results, noting in a joint release: “there is ample precedent . . . for such action.”