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This excerpt taken from the SIRI 8-K filed Mar 21, 2007. B. No Commission Rule Bars the Transaction. The Commission’s published rules do not prohibit one satellite radio licensee from acquiring control of the other. The Commission noted in its 1997 order authorizing satellite radio as a service that satellite radio “licensees, like other satellite licensees, will be subject to rule 25.118. ”149 That rule, now Section 25.119, implements the statutory requirement that the Commission grant transfer applications if doing so is in the public interest,150 and sets forth the basic procedures for filing an application.151 Nowhere does that rule prohibit the ability of a satellite radio licensee to transfer or assign its license in any way. Indeed, the Commission’s 1997 reference to this rule expressly recognizes that the agency’s rules contemplate and permit ___________________________________ 147 See, e.g., XM Terrestrial Repeater Authorization Order, 16 FCC Rcd at 16,781; XM Radio Inc., Request for Special Temporary Authority to Operate Additional Satellite Digital Audio Radio Service Terrestrial Repeaters, Order and Authorization, 19 FCC Rcd 18,140 (2004). 148 Mel Karmazin, currently Chief Executive Officer of Sirius, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. 149 Satellite Radio Implementation Order, 12 FCC Rcd at 5823 (¶ 170). 150 47 U.S.C. § 310(d). 151 47 C.F.R. § 25.119. 49 the filing of this Application for the transfer of control of both satellite radio licensees to common ownership. While the Commission stated in the same order that “one licensee will not be permitted to acquire control of the other remaining satellite DARS license,”152 this language was not codified in the Code of Federal Regulations and thus is not a binding FCC regulation.153 To the contrary, it is merely a policy statement reflecting the Commission’s view, based on the evidence available in 1997, that two satellite radio licensees were needed to have enough competition in the audio entertainment market. That statement does not preclude today’s Commission, recognizing a radically altered competitive environment, from finding that the proposed transaction serves the public interest.154 However, even if the Commission were inclined to treat this decade-old statement as an “uncodified” rule creating a limitation on a codified regulation, that treatment would not prohibit ___________________________________ 153 See, e.g., Wilderness Soc’y v. Norton, 434 F.3d 584, 596 (D.C. Cir. 2006) (“The real dividing point between regulations and general statements of policy is publication in the Code of Federal Regulations, which the statute authorizes to contain only documents ‘having general applicability and legal effect,’ and which the governing regulations provide shall contain only ‘each Federal regulation of general applicability and current or future effect.”); Fla. Power & Light Co. v. EPA, 145 F.3d 1414, 1418 (D.C. Cir. 1998) (holding that a statement published in the Federal Register, but not the C.F.R., was not a rule); Am. Portland Cement Alliance v. EPA, 101 F.3d 772, 776 (D.C. Cir. 1996). By contrast, when the Commission did discuss actual “rules” that it was adopting in the Satellite Radio Implementation Order, it attached specific text for such rules, which were then published in the Code of Federal Regulations. See Satellite Radio Implementation Order, 12 FCC Rcd at 5851 (App. A) (attaching proposed text of amendments to the Commission’s Part 25 rules). 154 Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997) (citations omitted) (“By issuing a policy statement, an agency lets the public know its current enforcement or adjudicatory approach. The agency retains the discretion and the authority to change its position—even abruptly—in any specific case because a change in its policy does not affect the legal norm.”); FCC v. Pottsville Broad. Co., 309 U.S. 134, 138 (1940) (public interest standard of the Communications Act is “a supple instrument for the exercise of discretion by the expert body which Congress has charged to carry out its legislative policy”). 50 this transaction. It is settled law that the Commission may waive any of its rules on its own motion or upon request, if good cause is shown.155 Moreover, agencies have discretion to decide significant issues through adjudication, rather than rulemaking, provided the decision (1) is a product of reasoned decision making, and (2) gives adequate notice to the parties subject to the decision.156 Accordingly, to the extent necessary, the Applicants specifically request that the Commission waive, modify, or otherwise alter the subject statement from the 1997 licensing order to the extent necessary to permit this merger. The Commission is authorized to waive its rules when “[t]he underlying purpose of the rule(s) would not be served or would be frustrated, by application to the instant case, and [] a grant of the requested waiver would be in the public interest.”157 In this case, waiver of the rule is appropriate because the preservation of two separate satellite radio licensees is no longer required to “help assure sufficient continuing competition,” which was the purpose of the original restriction.158 As detailed above, the ___________________________________ 156 See, e.g., SEC v. Chenery Corp., 332 U.S. 194, 203 (1947); Chisholm v. FCC, 538 F.2d 349, 365 (D.C. Cir. 1976) (noting that where parties have actual notice of a rule change and an opportunity to submit comments on it, requiring the FCC to “go through the motions of notice and comment rulemaking” would represent an “empty formality”). See also 47 C.F.R. § 1.412(a)(3) (providing that while notice “ordinarily” will be given by publication in the Federal Register, this is not necessary if “all persons subject to the proposed rules are named and have actual notice of the proposal as a matter of law”). 157 47 C.F.R. § 1.925(b)(3)(i); see also, e.g., Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (stating that waiver is appropriate where rigid compliance with the rule is inconsistent with the public interest). 158 Satellite Radio Implementation Order, 12 FCC Rcd at 5823 (¶ 170); see also id., 12 FCC Rcd at 5786 (¶ 77) (describing the Commission’s goal to “create as competitive a market structure as possible”). 51 modern market for audio entertainment services in which satellite radio competes for listeners has significantly evolved in the past ten years and is now extremely competitive.159 Such changed market conditions provide the “good cause” necessary to waive the rule and indicate that neither the underlying purpose of the “rule” nor the public interest is served by strict application.160 Similarly, processing of this Application allows the FCC to collect “the relevant information [on competition faced by satellite radio] necessary [for] mature and fair consideration” of the requested rule modification and provides an open forum for all interested parties, including those “most immediately affected,” to be “accorded a full opportunity to be heard.”161 Accordingly, because the benefits outlined above indicate that the proposed transaction is in the public interest,162 the Commission should either waive or modify any uncodified rule in the context of its adjudication of the merger without commencing a separate rulemaking.163 To ___________________________________ 160 See 47 C.F.R. § 1.925(b)(3) (“The Commission may grant a request for waiver if it is shown that: (i) The underlying purpose of the rule(s) would not be served or would be frustrated, by application to the instant case, and that a grant of the requested waiver would be in the public interest; or (ii) In view of unique or unusual factual circumstances of the instant case, application of the rule(s) would be inequitable, unduly burdensome or contrary to the public interest, or the applicant has no reasonable alternative”). See also Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (providing that waiver is appropriate where rigid compliance with the rule is inconsistent with the public interest). 161 NLRB v. Bell Aerospace Co., 416 U.S. 267, 295 (1974). See also Comsat Corp., Policies and Rules for Alternative Incentive Based Regulation of Comsat Corp., Report and Order, 14 FCC Rcd 3065, 3079 (¶ 38) (1999) (opting to proceed by adjudication instead of a rulemaking where “using the rulemaking process would be overly burdensome and unnecessary to assure adequate notice and comment” and where an adjudicatory proceeding “can offer adequate protection for the rights of interested parties”). 162 See supra Sections III and IV. 163 See, e.g., Bell Aerospace, 416 U.S. at 295; Chenery, 332 U.S. at 203; Chisholm, 538 F.2d at 365. 52 ensure that adequate notice is provided, the Applicants hereby request that the Commission publish its request for comment on this Application in the Federal Register. |
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