FCC v. NEXTWAVE COMMUNICATIONS, INC.

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Case Basics
Docket No. 
01-653
Petitioner 
Federal Communications Commission
Respondent 
Nextwave Communications, Inc.
Consolidation 
No. 01-657
Advocates
(Argued the cause on behalf of petitioner Federal Communications Commission)
(Argued the cause for the respondents)
(Argued the cause on behalf of Creditors NextWave Communications, Inc., as amicus curiae)
(Argued the cause on behalf of the petitioners Arctic Slope Regional Corp., et al)
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Facts of the Case 

After the Federal Communications Commission (FCC) auctioned off certain broadband personal communications services licenses to NextWave Personal Communications, Inc., Nextwave filed for Chapter 11 bankruptcy protection and suspended payments to all creditors, including the FCC. The FCC asserted that NextWave's licenses had been canceled automatically when the company missed its first payment-deadline and announced that NextWave's licenses were available for auction. Ultimately, when the FCC denied NextWave's petition for reconsideration of the license cancellation, the Court of Appeals for the D. C. Circuit held that the cancellation violated 11 USC section 525(a), which provides that a "governmental unit may not...revoke...a license...to...a debtor...solely because such...debtor...has not paid a debt that is dischargeable in the case." (Together with No. 01-657, Arctic Slope Regional Corp. et al. v. NextWave Personal Communications Inc. et al.)

Question 

Does section 525 of the Bankruptcy Code prohibit the Federal Communications Commission from revoking licenses held by a debtor in bankruptcy upon the debtor's failure to make timely payments owed to the FCC for purchase of the licenses?

Conclusion 
Decision: 8 votes for Nextwave Communications, Inc., 1 vote(s) against
Legal provision: Bankruptcy Code, Bankruptcy Act or Rules, or Bankruptcy Reform Act of 1978

Yes. In an 8-1 opinion delivered by Justice Antonin Scalia, the Court held that the FCC's cancellations of the licenses violated section 525(a) as revocations of government licenses solely for nonpayment of the debtors' dischargeable debts. The Court rejected the FCC's argument that it did not revoke NextWave's licenses solely because of nonpayment and noted that the fact that the FCC had a valid regulatory motive for its action was irrelevant. Justice Scalia reasoned that, because the statute refers to failure to pay a debt as the sole cause of cancellation, it cannot reasonably be understood to include the governmental unit's motive in effecting the cancellation, since such a reading would deprive section 525 of force. Justice John Paul Stevens filed an opinion concurring in part and concurring in the judgment. Justice Stephen G. Breyer authored a dissenting opinion.

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FCC v. NEXTWAVE COMMUNICATIONS, INC.. The Oyez Project at IIT Chicago-Kent College of Law. 17 October 2014. <http://www.oyez.org/cases/2000-2009/2002/2002_01_653>.
FCC v. NEXTWAVE COMMUNICATIONS, INC., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2002/2002_01_653 (last visited October 17, 2014).
"FCC v. NEXTWAVE COMMUNICATIONS, INC.," The Oyez Project at IIT Chicago-Kent College of Law, accessed October 17, 2014, http://www.oyez.org/cases/2000-2009/2002/2002_01_653.