[Congressional Record Volume 158, Number 31 (Tuesday, February 28, 2012)]
[Extensions of Remarks]
[Pages E265-E267]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    CONFERENCE REPORT ON H.R. 3630, MIDDLE CLASS TAX RELIEF AND JOB 
                          CREATION ACT OF 2012

                                 ______
                                 

                               speech of

                          HON. HENRY A. WAXMAN

                             of california

                    in the house of representatives

                       Friday, February 17, 2012

  Mr. WAXMAN. Mr. Speaker, on February 24, 2012, Rep. Fred Upton, the 
Chairman of the Energy and Commerce Committee, inserted into the record 
a section-by-section discussion of the spectrum provisions in H.R. 
3630, the Middle Class Tax Relief and Job Creation Act of 2012. This is 
a one-sided and after-the-fact attempt to influence interpretation of 
the Act by the Federal Communications Commission (FCC) and reviewing 
courts. Although there are a number of inaccuracies in the section-by-
section analysis, Rep. Upton's commentary on section 6404, which adds a 
new paragraph 17 to section 309(j) of the Communications Act addressing 
participation in auctions, is particularly egregious.
  Rep. Upton made two unsuccessful attempts prior to the passage of 
this legislation to have the conferees adopt his views on the consensus 
language in section 6404. First, on February 15, 2012, Rep. Upton's 
staff proposed that language be inserted into the Joint Explanatory 
Statement of the Conference Committee stating that a ``full spectrum of 
bidders'' must be allowed to buy spectrum in incentive auctions. The 
conferees rejected this suggested language. In particular, it did not 
reflect the provision in the final bill that preserved the authority of 
the FCC to adopt rules that protect competition in any market, such as 
by requiring carriers that win licenses at auction to divest spectrum.

[[Page E266]]

  The following day, as the Joint Explanatory Statement was being 
finalized, Rep. Upton's staff proposed a section-by-section summary of 
the Act for insertion into the report. This summary was also rejected 
by the conferees. As a result, the final Joint Explanatory Statement 
contains a section-by-section summary of only the language in H.R. 3630 
as it passed the House, not as it was modified by the conferees. This 
section-by-section summary of the House-passed language was prepared by 
the Congressional Research Service as an aid to the conferees.
  The conferees, including Rep. Upton, did agree to include in the 
Joint Explanatory Statement the following general language to describe 
the spectrum provisions in the final legislation: ``The public safety 
and spectrum provisions of this legislation advance wireless broadband 
service by clearing spectrum for commercial auction, promoting billions 
of dollars in private investment, and creating tens of thousands of 
jobs. These provisions also deliver on one of the last outstanding 
recommendations of the 9/11 Commission by creating a nationwide 
interoperable broadband communications network for first responders and 
generating billions of dollars of Federal revenue.'' This is the only 
summary of the final legislation approved by the conferees.
  Accordingly, Rep. Upton's insertion of his own section-by-section 
analysis of the bill, offered after passage and without approval by the 
other conferees, carries no special weight. It is an effort by one 
member of the Conference Committee to advance an interpretative spin 
that does not fairly reflect the language of new paragraph 17 and was 
specifically rejected by the conferees as a whole.
  Like Rep. Upton, I was a conferee. The language in question was 
negotiated over multiple meetings by the staff of three members of the 
House and five members of the Senate. The three House members 
represented in these meetings were all conferees: Rep. Upton, the 
Chairman of the House Energy and Commerce Committee, Rep. Walden, the 
Chairman of the Subcommittee on Communications and Technology, and 
myself, the Ranking Member of the Energy and Commerce Committee. The 
five Senators represented were two conferees, Senator Baucus, the 
Chairman of the Senate Finance Committee, and Senator Kyl, a member of 
the Finance Committee and the Republican Whip; two Senators with 
special expertise in spectrum policy, Senator Rockefeller, the Chairman 
of the Senate Commerce Committee, and Senator Hutchinson, the Ranking 
Member of the Commerce Committee; and Senate Majority Leader Harry 
Reid.
  My staff in particular played a leading role in writing and 
negotiating the language in paragraph 17 that ended up in the final 
bill, including the very savings language Rep. Upton glosses over, 
which was inserted specifically to protect FCC authority. I have a very 
different perspective on the language my staff put forward than the one 
Rep. Upton suggests.
  Rep. Upton states that the ``sole qualifications'' of bidders under 
paragraph 17 are that they ``abide by the auction procedures and other 
requirements to protect the auction process, and that they meet the 
technical, financial, character, and citizenship requirements under 
303(1)(1), 308(b), and 310 of the Communications Act'' either at the 
time of the bidding or before grant of the license if they submit a 
winning bid. What this interpretation fails to reflect is that the 
prohibition in subparagraph 17(A) is only a prohibition on 
``prevent[ing] a person from participating in a system of competitive 
bidding.'' A ``system of competitive bidding'' under the Communications 
Act can include multiple groups of licenses or blocks of licenses. It 
therefore would be permissible for the FCC to set aside blocks of 
licenses within an auction on which particular bidders may not bid. 
This would limit a person's participation in the system of competitive 
bidding, which subparagraph 17(A) allows, but not prevent 
participation, which subparagraph 17(A) prohibits. For example, a 
system of competitive bidding in which the FCC established two blocks 
of licenses, and allowed bidders to bid on either of the two blocks, 
but not both, would be consistent with subparagraph 17(A).
  Rep. Upton acknowledges that nothing in paragraph 17 affects the 
FCC's authority to ``adopt and enforce rules of general 
applicability,'' but suggests that such rules must take their form via 
``notice and comment rulemaking conducted separately from a particular 
auction'' and with the input of others besides ``parties courting 
particular spectrum.'' Rep. Upton is apparently trying to create a 
distinction--found nowhere in the law--between ``rules of general 
applicability'' conducted through separate notice and comment 
rulemaking and ``rules regarding particular carriers, particular 
classes of carriers, or particular auctions.'' This interpretation 
departs greatly from what was agreed to by the conferees. Contrary to 
the interpretation posited by Rep. Upton, a ``rule of general 
applicability'' is a well-known term used in the definition of a 
``rule'' in the Administrative Procedure Act (APA). The established APA 
and judicial meaning is that a rule of general applicability is a rule 
that is not party-specific or what is known as a ``rule of particular 
applicability.'' The term ``rule of general applicability'' was used in 
the savings clause in subparagraph 17(B) to ensure that the FCC can 
adopt and enforce rules that apply to all licenses, apply to auctioned 
spectrum generally, or apply to spectrum offered in a particular 
auction. All of these types of rules are enforceable with respect to 
auctions and auctioned spectrum because they are not literally or 
effectively party-specific.
  Rep. Upton further states that the phrase ``rules concerning spectrum 
aggregation that promote competition'' was inserted in subparagraph 
17(B) to ``illustrate that the FCC retains authority to adopt such 
rules in an industrywide rulemaking'' if the authority for the rule 
``may be found elsewhere in the Communications Act and does not 
conflict with the prohibition on excluding bidders.'' There are 
multiple problems with this analysis. During negotiations among 
conferee staff, Rep. Upton's staff proposed that the phrase ``other, 
industrywide'' be inserted before ``rules of general applicability.'' 
This proposal was considered and rejected. The final language thus 
preserves the FCC's authority to issue any rules of general 
applicability, not just those that apply ``industrywide.'' It also 
makes clear that the savings clause in the last sentence preserves all 
of the FCC's pre-existing authority to issue rules of general 
applicability, not just those that address subjects ``other'' than 
participation in auctions.
  The language of the savings clause provides that ``[n]othing in 
subparagraph (A),'' which contains the prohibition on participation in 
a system of competitive bidding, ``affects any authority the Commission 
has to adopt and enforce rules of general applicability, including 
rules concerning spectrum aggregation that promote competition.'' If 
Rep. Upton were correct that the rules of general applicability cannot 
``conflict with the prohibition on excluding bidders,'' the savings 
clause would be meaningless. The whole point of the savings clause is 
to preserve the FCC's pre-existing authority to issue rules of general 
applicability. The savings language in subparagraph 17(B) limits the 
reach of the prohibition in subparagraph 17(A), not vice-versa as Rep. 
Upton contends.
  The purpose of the agreed-upon language is simple: It prohibits the 
FCC from singling out a specific carrier for exclusion from a system of 
competitive bidding as long as that carrier complies with all auction 
procedures and other requirements to protect the auction process 
established by the Commission and either meets the technical, 
financial, character, and citizenship qualifications under sections 
303(1)(1), 308(b), and 310 or would meet such qualifications before 
grant of the license. Rep. Upton is correct in saying that every 
carrier is eligible to participate in a system of competitive bidding. 
The FCC, however, is able to require those carriers to come into 
compliance with applicable spectrum holding limitations, and all other 
license qualifications of any type, prior to granting a particular 
license. As adopted by the conferees, subparagraph 17(B) clarifies that 
Congress intends for the FCC to continue to promote competition through 
its spectrum policies. The FCC can adopt and enforce, for example, a 
spectrum cap through a rule that applies either to all licenses or to 
spectrum offered in a particular auction, as long as such rules are not 
party-specific. The agreed-upon savings clause thus preserves the FCC's 
ability to require, among other things, the divestiture of specific 
spectrum, such as spectrum below 1 GHz, in order to promote 
competition.

  I was opposed to the language in paragraph 17 in the House-passed 
version of the bill. In the conference, I urged that the provision be 
deleted in its entirety. I was not successful in eliminating the 
section, but with the support of other conferees, I was successful in 
significantly limiting its application. Under pre-existing law, the FCC 
could have barred particular carriers like AT&T and Verizon from 
bidding on any of the relinquished broadcast spectrum if the FCC 
determined that excluding them would advance the public interest by 
promoting competition. Under the final language in paragraph 17, the 
FCC can no longer single out individual companies and exclude them from 
participating in a system of competitive bidding, but the FCC can limit 
their participation to discrete blocks of spectrum that are to be 
auctioned under the system of competitive bidding. Moreover, the FCC 
can require a company to divest spectrum it currently holds before 
awarding the company a license to new spectrum won in an auction. In 
effect, paragraph 17 gives companies with large spectrum holdings a 
choice: they can keep their existing spectrum or they can get new 
spectrum but give up their existing spectrum to preserve competition. 
Under paragraph 17, companies like AT&T and Verizon will be able to 
acquire new spectrum in an auction, but if the FCC determines the 
acquisition of that spectrum

[[Page E267]]

would diminish competition, the companies can be required to divest 
other spectrum before they get a license to the new spectrum.
  Prior to introduction of H.R. 3630 in the House, FCC staff was asked 
to meet with a bipartisan group of staff to review the draft House 
language. At that meeting, the FCC staff raised concerns regarding 
flaws in the proposed Republican language on bidder eligibility. 
Specifically, FCC staff stated that the House Republican language was 
overly broad and would hinder the Commission's ability to promote 
competition. Along with other conferees, I worked to correct these 
problems and provide the Commission appropriate flexibility. The 
conferees unequivocally rejected the original House language, which 
Rep. Upton seeks to resurrect through his interpretive gloss.
  The final language in paragraph 17 was not to everyone's liking. The 
conferees tentatively agreed to the language on Sunday, February 12. As 
the final language leaked out, one company launched an eleventh-hour 
campaign to change it. According to an article in Politico on February 
15, AT&T was ``furious with proposed language in the deal that could 
affect its ability to bid for the spectrum'' (David Rogers and Manu 
Raju, Spectrum Auction a Holdup on Jobless Benefits Deal, PoliticoPro 
(Feb. 15, 2012) (online at https://www.politicopro.com/story/tech/
?id=9274)). House Republicans, Politico reported, ``would like to 
appease AT&T by refining language its negotiators have already 
accepted'' (Id.).
  AT&T's effort failed. As Politico reported the following day, ``House 
Republicans had hoped to appease AT&T by refining language its 
negotiators have already accepted--but this effort was finally 
dropped'' (David Rogers and Manu Raju, Payroll Tax Deal Finalized, 
PoliticoPro (Feb. 16, 2012) (online at http://politi.co/yHTIM4L)). If 
accepted as accurate legislative history, Rep. Upton's remarks would 
give AT&T through the backdoor much of what the company was not able to 
achieve through the actual legislative process. This effort at 
revisionism should be rejected by the FCC and reviewing courts 
interpreting this section.
  I also have concerns about the discussion in Rep. Upton's remarks of 
section 6407, which addresses unlicensed use of spectrum in guard 
bands.
  Unlicensed spectrum has been an engine of economic innovation and 
growth. Many advocate that allowing unlicensed use in the frequencies 
currently occupied by broadcasters could lead to new innovations like 
``Super WiFi.'' The final legislation advances this goal in three ways: 
(1) it gives the FCC the authority to preserve TV white spaces; (2) it 
gives the FCC the authority to optimize existing TV white spaces for 
unlicensed use by consolidating the existing white spaces into more 
optimal configurations through band plans; and (3) it gives the FCC the 
authority to use part of the spectrum relinquished by TV broadcasters 
in the incentive auction to establish nationwide ``guard bands,'' 
including in high value markets that currently have little or no white 
spaces today, creating additional, new white spaces. Experts believe 
nationwide, unlicensed access to guard bands will enable innovation and 
promote investment in new unlicensed technologies.
  The relevant language is contained in sections 6402, 6403, and 6407. 
Section 6402 creates a new subparagraph 309(j)(8) of the Communications 
Act that authorizes the FCC to pay for the voluntary relinquishment of 
spectrum ``in order to permit the assignment of new initial licenses.'' 
Section 6403(a) provides that the reverse auction to relinquish 
broadcast television spectrum is conducted ``in order to make spectrum 
available for assignment through a system of competitive bidding.'' 
Section 6407 in turn permits the FCC to use some of the relinquished 
spectrum to create guard bands and, as detailed below, to allow 
unlicensed use in those guard bands.
  The final legislation does not require that existing white spaces be 
auctioned. Section 6403(b) gives the FCC discretion in deciding how 
much spectrum, if any, the agency should auction in addition to the 
relinquished spectrum. Section 6403(b)(1)(A) requires the FCC to 
``evaluate the broadcast television spectrum (including spectrum made 
available through the reverse auction).'' Section 6403(b)(1)(B) then 
specifies that the FCC ``may'' repack the remaining broadcast spectrum, 
which would include white spaces, by making ``such reassignments of 
television channels as the Commission considers appropriate.'' Section 
6403(b)(1)(B) also provides that the FCC ``may . . . reallocate such 
portions of such spectrum as the Commission determines are available 
for reallocation.'' Under section 6403(c), only spectrum that the FCC 
determines should be ``reallocated'' under section 6403(b)(1)(B) is 
required to be auctioned.
  The savings clause found in section 6407 provides the FCC authority 
to use ``relinquished or other spectrum'' to create ``guard bands'' in 
the spectrum to be auctioned and make these guard bands available for 
``unlicensed use.'' Under this authority, the FCC could create new TV 
white spaces in all markets by creating the guard bands out of spectrum 
that is relinquished by the broadcasters.
  In Rep. Upton's summary of section 6407, he states that the section 
gives the FCC the authority to ``create guard bands and allow 
secondary, unlicensed use in spectrum it has cleared with federal 
funds.'' I agree with Rep. Upton that the FCC can create guard bands in 
this spectrum and allow unlicensed use in these guard bands, but such 
use does not need to be a ``secondary'' use. During the course of 
negotiations over section 6407, Rep. Upton's staff proposed that the 
language in section 6407 include the requirement that any unlicensed 
use of the guard bands be ``secondary'' to a licensed use of the 
spectrum in the guard bands. This provision was not accepted by the 
conferees. As a result, the final language gives the FCC the discretion 
to decide whether to make unlicensed use the primary or secondary use 
of the guard bands. Of course, any unlicensed use of the guard bands 
may not cause harmful interference with licensed uses of the spectrum 
that is auctioned.
  While there are other assertions made by Rep. Upton's insertion in 
the Congressional Record that are inaccurate, these examples should 
serve to show that his statement does not fairly reflect the intent of 
Congress in adopting the provisions. In light of the fact that the 
conferees chose not to adopt a detailed summary of the provisions in 
this portion of the Act, it will fall to the FCC's open processes to 
ultimately inform its implementation of the Act's language.

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