In an ominous development for merger partners AT&T and T-Mobile USA, FCC Chairman Julius Genachowski circulated a proposed order among the FCC’s commissioners yesterday that would designate the $39 billion transaction for hearing before an administrative law judge (ALJ). Confirmed by unnamed members of the FCC’s staff, Genachowski’s action signals FCC opposition to the deal, as it establishes that there is not enough support among the FCC’s four current members to allow the deal to proceed or that there are major issues associated with the merger that the agency cannot resolve. Because the FCC is technically precluded from blocking a proposed assignment or transfer of control, it must refer to the ALJ any transaction that it cannot approve as serving the public interest. The FCC last took the rare step of designating a major transaction for hearing in 2002, when the agency referred to the ALJ EchoStar’s proposed acquisition of DirecTV, its sole competitor in the direct broadcast satellite industry. (EchoStar and DirecTV canceled their merger plans shortly after the FCC issued its hearing designation order.) Resembling a trial, an ALJ hearing typically lasts between six and twelve months, after which the ALJ delivers an initial decision to the FCC’s commissioners for the final vote. Under the terms of the proposed order, the ALJ hearing would not begin until the Justice Department’s ongoing antitrust lawsuit against the AT&T/T-Mobile deal is resolved. In one bit of good news for AT&T, Genachowski has also circulated a proposed order among his colleagues that would approve with conditions the carrier’s proposed $1.93 billion acquisition of 700 MHz band licenses held by Qualcomm, Inc. Although AT&T senior vice president Larry Solomon criticized the proposed hearing designation order as “yet another example of a government agency acting to prevent billions in new investment,” a spokeswoman for Sprint Nextel said, “we thank Chairman Genachowski for his leadership on this issue and look forward to the FCC moving forward quickly.”