NextWave Prsnal Comm v. FCC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 15, 2001 Decided June 22, 2001

No. 00-1402

NextWave Personal Communications Inc. and
NextWave Power Partners Inc.,
Petitioners

v.

Federal Communications Commission and
United States of America,
Respondents

BellSouth Corporation, et al.,
Intervenors

Consolidated with
00-1403

On Petition for Review and Notice of Appeal of
Orders of the Federal Communications Commission

Theodore B. Olson argued the cause for petitioners/appel-
lants. With him on the briefs were Thomas G. Hungar,

Donald B. Verrilli, Jr., Ian Heath Gershengorn and Lara M.
Flint. Miguel A. Estrada entered an appearance.

William H. Crispin, Emanuel Grillo, David Friedman and
Kenneth N. Klee were on the brief for amici curiae Senator
Robert G. Torricelli, et al. in support of petitioners/appellants.

Daniel M. Armstrong, Associate General Counsel, Federal
Communications Commission, argued the cause for respon-
dents/appellee. With him on the brief were Christopher J.
Wright, General Counsel, Joel Marcus and Stanley R.
Scheiner, Counsel, Jacob M. Lewis and H. Thomas Byron
III, Attorneys, U.S. Department of Justice. Stewart A.
Block, Counsel, Federal Communications Commission, en-
tered an appearance.

Richard G. Taranto argued the cause for intervenors Cel-
lular Telecommunications Industry Association, et al. With
him on the brief were Michael F. Altschul, L. Andrew Tollin,
Robert G. Kirk, Craig E. Gilmore, Douglas I. Brandon,
Howard J. Symons, Sara F. Leibman, Louis Gurman, Chris-
ta M. Parker, John T. Scott III, Mark L. Evans, Lawrence J.
Movshin, Michael Deuel Sullivan and H. Richard Juhnke.
Matthew R. Sutherland entered an appearance.

Before: Sentelle, Tatel and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: This case concerns the extent to
which the Bankruptcy Code limits a federal agency--here,
the Federal Communications Commission--acting to imple-
ment the provisions of its own statute. Seeking to comply
with its statutory duty to ensure small business participation
in auctions of broadband PCS licenses, the Commission al-
lowed winning bidders to pay for their licenses in install-
ments. As part of this scheme, the Commission took and
perfected security interests in the licenses, and provided for
license cancellation should a bidder fail to make timely pay-
ments. When appellants, winning bidders on several licenses,
declared bankruptcy and ceased making payments, the Com-

mission canceled their licenses. Applying the fundamental
principle that federal agencies must obey all federal laws, not
just those they administer, we conclude that the Commission
violated the provision of the Bankruptcy Code that prohibits
governmental entities from revoking debtors' licenses solely
for failure to pay debts dischargeable in bankruptcy. The
Commission, having chosen to create standard debt obli-
gations as part of its licensing scheme, is bound by the usual
rules governing the treatment of such obligations in bank-
ruptcy.

I

In 1993, Congress amended the Communications Act of
1934 to authorize the Federal Communications Commission to
award spectrum licenses "through a system of competitive
bidding." 47 U.S.C. s 309(j)(1). In "identifying classes of
licenses and permits to be issued by competitive bidding," and
in "designing the methodologies" for such bidding, Congress
directed the Commission to promote several objectives, in-
cluding "the development and rapid deployment of new tech-
nologies, products and services," the "recovery for the public
of a portion of the value of the public spectrum resource made
available for commercial use," and the "efficient and intensive
use of the electromagnetic spectrum." Id. s 309(j)(3). Con-
gress also directed the Commission to "promot[e] economic
opportunity and competition and ensur[e] that new and inno-
vative technologies are readily accessible to the American
people by ... disseminating licenses among a wide variety of
applicants, including small businesses [and] rural telephone
companies." Id. s 309(j)(3)(B). To further this last goal,
Congress directed the Commission to "consider alternative
payment schedules and methods of calculation, including lump
sums or guaranteed installment payments ... or other sched-
ules or methods." Id. s 309(j)(4)(A).

Acting pursuant to this statute, the Commission adopted
rules to auction licenses for "broadband PCS"--"personal
communications services in the 2 GHz band." In re Imple-
mentation of Section 309(j) of the Communications Act, 9

FCC Rcd 5532 p 1 (1994). The Commission expected broad-
band PCS to "provide new mobile communications capabili-
ties" through "a new generation of communications devices"
including "small, lightweight, multi-function portable phones,
portable facsimile and other imaging devices, new types of
multi-channel cordless phones, and advanced paging devices
with two-way data capabilities." Id. p 3. The Commission
"determined that the use of competitive bidding to award
broadband PCS licenses, as compared with other licensing
methods, would speed the development and deployment of
new services to the public and would encourage efficient use
of the spectrum," as required by statute, since "auctions
would generally award licenses quickly to those parties who
value them most highly and who are therefore most likely to
introduce service rapidly to the public." Id. p 5. The Com-
mission expected the PCS license auction to "constitute the
largest auction of public assets in American history," recover-
ing "billions of dollars for the United States Treasury," and
thus fulfilling another statutory mandate. Id. p 1.

As directed by Congress, the Commission adopted a variety
of measures to promote small business ownership of PCS
licenses, including setting aside two blocks of licenses, the "C"
and "F" Blocks, for bidding by entities with annual gross
revenues and total assets below specified amounts. Id. p 12.
Especially relevant to this case, the Commission allowed
"most successful bidders within the [C and F Blocks] to pay
for their licenses in installments." Id. p 16. Observing that
"the primary impediment to participation [in license auctions]
by designated [small business] entities is lack of access to
capital," id. p 10, the Commission concluded that "installment
payments are an effective means to address the inability of
small businesses to obtain financing and will enable these
entities to compete more effectively for the auctioned spec-
trum." Id. p 135. "By allowing payment in installments," the
Commission stated, "the government is in effect extending
credit to licensees, thus reducing the amount of private
financing needed prior to and after the auction." Id. p 136.
The Commission also announced that "[t]imely payment of all
installments will be a condition of the license[ ] grant and

failure to make such timely payment will be grounds for
revocation of the license." Id. p 138.

In 1995, a group of former telecommunications executives
founded NextWave Personal Communications Inc. and
NextWave Power Partners Inc. (collectively "NextWave"),
appellants in this case, for the purpose of bidding on PCS
licenses and operating a personal communications service.
NextWave's founders hoped the company would become a
"carrier's carrier," selling wireless services and airtime
wholesale. Appellants' Opening Br. at 5. At C Block auc-
tions in May and July, 1996, NextWave bid $4.74 billion in
total, winning sixty-three licenses. The company made a
$474 million down payment. Several months later, the Com-
mission granted NextWave its licenses, took a security inter-
est in each, and filed UCC financing statements to perfect its
claims. The security agreements gave the Commission "a
first lien on and continuing security interest in all of the
Debtor's rights and interest in [each] License." Security
Agreement between NextWave and FCC p 1 (January 3, 1997).
The licenses included the following language: "This authori-
zation is conditioned upon the full and timely payment of all
monies due pursuant to ... the terms of the Commission's
installment plan as set forth in the Note and Security Agree-
ment executed by the licensee. Failure to comply with this
condition will result in the automatic cancellation of this
authorization." FCC, Radio Station Authorization for
Broadband PCS 2 (issued to NextWave January 3, 1997).

After the Commission awarded the C Block licenses, sever-
al successful bidders, including NextWave, experienced diffi-
culty obtaining financing, having agreed to pay on average
almost three times what winning bidders in the prior A and B
Block auctions had paid, and several times what winning
bidders in subsequent D, E, and F block auctions paid. In
response, the Commission suspended installment payment
obligations for C Block licensees, and then issued two Re-
structuring Orders, offering a variety of revised financing
options that allowed C Block licensees to surrender some or
all of their licenses for full or partial forgiveness of their
outstanding debt. See In re Amendment of the Comm'n's

Rules Regarding Installment Payment Fin. for Pers. Com-
munications Servs. Licensees, Second Report and Order and
Further Notice of Proposed Rule Making, 12 FCC Rcd 16436
p p 6, 32-69 (1997); In re Amendment of the Comm'n's Rules
Regarding Installment Payment Fin. for Pers. Communica-
tions Servs. Licensees, Order on Recons. of the Second Report
and Order, 13 FCC Rcd 8345 p p 11-15 (1998); see also In re
Amendment of the Comm'n's Rules Regarding Installment
Payment Fin. for Pers. Communications Servs. Licensees,
Second Order on Recons. of the Second Report and Order, 14
FCC Rcd 6571 (1999). None of the restructuring options
allowed licensees to keep any of their licenses for less than
the full bid price. See In re Amendment of the Comm'n's
Rules, Order on Recons., 13 FCC Rcd 8345 p 8. According to
the Commission, these options balanced the goals of introduc-
ing new spectrum services rapidly and promoting small busi-
ness participation in PCS auctions against the need to main-
tain auction integrity and treat unsuccessful bidders fairly.
See In re Amendment of the Comm'n's Rules, 12 FCC Rcd
16436 p p 1-5; see also U.S. Airwaves, Inc. v. FCC, 232 F.3d
227 (D.C. Cir. 2000) (upholding restructuring scheme). The
Commission gave licensees until June 8, 1998 to elect a
restructuring option, and until July 31, 1998 to resume install-
ment payments. Public Notice, Wireless Telecommunica-
tions Bureau Announces June 8, 1998 Election Date, 13 FCC
Rcd 7413 (1998). It set October 29, 1998 as the last date it
would accept late installment payments. Id.

On June 8, 1998, after failing to obtain stays of the election
deadline from the Commission and this court, NextWave filed
for Chapter 11 bankruptcy protection in New York. See
NextWave Pers. Communications, Inc. v. FCC (In re
NextWave Pers. Communications, Inc.), 235 B.R. 263, 267
(Bankr. S.D.N.Y. 1998) ("NextWave I"). Because the Bank-
ruptcy Code is central to this case, we pause to summarize
certain relevant provisions. Section 362, the "automatic stay"
provision, provides that petitions filed under Chapter 11
"operate[ ] as a stay, applicable to all entities" of a variety of
acts to collect on or enforce debts. 11 U.S.C. s 362(a).
Subsection 362(a)(3) stays "any act to obtain possession of

property of [an] estate ... or to exercise control over proper-
ty of the estate," id. s 362(a)(3), but subsection 362(b)(4)
provides an exception to 362(a)(3) for "governmental unit[s]"
acting to "enforce" their "regulatory power." Id. s 362(b)(4).
Subsections 362(a)(4) and (5) stay "any act to create, perfect,
or enforce any lien against property of the estate" or of the
debtor. Id. s 362(a)(4), (5). The regulatory power exception
does not apply to these subsections. See id. s 362(b)(4). In
general, an automatic stay lasts only until a bankruptcy case
is closed or dismissed, or until the bankruptcy court grants or
denies a discharge. See id. s 362(c)(2). Other provisions of
the Code, however, offer more permanent relief. Section 525
prohibits "governmental unit[s]" from "revok[ing]" a bank-
rupt's or debtor's license "solely because such bankrupt or
debtor ... has not paid a debt that is dischargeable ...
under this title." Id. s 525(a). Finally, under section 1123,
11 U.S.C. s 1123, bankrupts (subject to court approval) have
the power to "cure" their defaults--that is, to "tak[e] care of
the triggering event and return[ ] to pre-default conditions."
Di Pierro v. Taddeo (In re Taddeo), 685 F.2d 24, 26-27 (2d
Cir. 1982).

After declaring bankruptcy, and in line with the "normal
deferment of the payment of preorganization claims until
their disposition can be made part of a plan of reorganiza-
tion," In re Penn Cent. Transp. Co., 467 F.2d 100, 102 n.1 (3d
Cir. 1972), NextWave made no further payments on its
licenses. Nor did it seek permission to make installment
payments under the "necessity of payment" doctrine, which
some courts have invoked to authorize payment of pre-
petition claims "if such payment [is] essential to the continued
operation of the debtor." In re Just For Feet, Inc., 242 B.R.
821, 825 (Bankr. D. Del. 1999). NextWave sought no such
authorization, it explains, because "the Code's automatic stay
provision generally prevents even government creditors from
enforcing payment obligations or seizing assets of the estate,"
and thus it had "no reason to believe it would be required to
make the October 1998 installment payment while in bank-
ruptcy." Appellants' Opening Br. at 10 & n.8.

Instead, NextWave alleged in the bankruptcy court that its
$4.74 billion license fee obligation was avoidable under section

544 of the Bankruptcy Code as a "fraudulent conveyance"
since the company had not received reasonably equivalent
value in exchange for incurring the obligation: by the time
the Commission actually conveyed the licenses to NextWave,
the company claimed, their value had declined to less than $1
billion. NextWave I, 235 B.R. at 269; see also NextWave
Pers. Communications, Inc. v. FCC (In re NextWave Pers.
Communications), 235 B.R. 277, 290 (Bankr. S.D.N.Y. 1999)
("NextWave III"). Ruling on this claim, the bankruptcy
court began by addressing its jurisdiction. It acknowledged
that under 47 U.S.C. s 402, it lacked jurisdiction to "enjoin[ ],
review[ ], assess[ ] damages for or otherwise adjudicat[e] the
consequences of the conduct of [a] Federal agency acting
within the scope of its Congressional mandate." NextWave I,
235 B.R. at 268. It nevertheless asserted jurisdiction over
the case because, in its view, NextWave's claim against the
Commission did not involve "any regulatory conduct on the
part of the FCC," but rather concerned solely the debtor-
creditor relationship between the FCC and NextWave. Id. at
269; see also NextWave Pers. Communications, Inc. v. FCC
(In re NextWave Pers. Communications), 235 B.R. 305, 314
(Bankr. S.D.N.Y. 1999) ("NextWave IV"). Nothing in the
Communications Act, the court said, suggests that a bank-
ruptcy court lacks jurisdiction to implement the provisions of
the Code "which affect [the Commission] as a creditor."
NextWave I, 235 B.R. at 269-70. Turning to the merits, the
court found that NextWave's winning bid exceeded the fair
market value of its licenses at the time they were conveyed,
NextWave III, 235 B.R. at 304, and avoided $3.72 billion of
NextWave's $4.74 billion license fee obligation, ruling in effect
that the company could keep its licenses for the reduced price
of $1.02 billion. See NextWave IV, 235 B.R. 305, aff'd
NextWave Pers. Communications, Inc. v. FCC (In re
NextWave Pers. Communications, Inc.), 241 B.R. 311, 321
(S.D.N.Y. 1999); see also In re NextWave Pers. Communica-
tions, Inc., 235 B.R. 314, 316 (Bankr. S.D.N.Y. 1999)
("NextWave V").

The Second Circuit reversed, making four key points.
First, it emphasized that the Commission's action, contrary to
the bankruptcy court's finding, was regulatory: the Commis-

sion explicitly "made 'full and timely payment of the winning
bid' a regulatory condition for obtaining and retaining a
spectrum license," and this condition had a purpose "related
directly to the FCC's implementation of the spectrum auc-
tions." FCC v. NextWave Pers. Communications, Inc. (In re
NextWave Personal Communications), 200 F.3d 43, 52 (2d
Cir. 1999) (quoting 47 C.F.R. s 24.708). The Second Circuit
explained the Commission's regulatory purpose as follows:

[The FCC] decided that it would be 'critically important
to the success of our system of competitive bidding ...
[to] provide strong incentives for potential bidders to
make certain of their qualifications and financial capabili-
ties before the auction so as to avoid delays in the
deployment of new services to the public that would
result from litigation, disqualification and re-auction.' ...
[Since] 'designated entities' such as NextWave ... were
allowed to pay in installments[,] [i]t was important for
the functioning of the auction ... that the FCC's default
rules and penalties be enforceable, because the FCC
relied upon them as a substitute for conducting the
'detailed credit checks' and other forms of due diligence
that otherwise would be necessary to ensure ... that the
licenses would be awarded to the appropriate entities.

Id. at 52-53 (quoting In re Implementation of Section 309(j)
of the Communications Act--Competitive Bidding, Second
Report and Order, 9 FCC Rcd 2348 p p 197, 194, 198 (1994)).

Second, the court held that the bankruptcy court had
interfered with this regulatory purpose by avoiding a substan-
tial portion of NextWave's bid price, thus allowing the compa-
ny to keep the licenses for a reduced price. Id. at 55. This,
the Second Circuit held, the bankruptcy court had no jurisdic-
tion to do: "Because jurisdiction over claims brought against
the FCC in its regulatory capacity lies exclusively in the
federal courts of appeals, see ... 47 U.S.C. s 402, the bank-
ruptcy and district courts lacked jurisdiction to decide the
question of whether NextWave had satisfied the regulatory
conditions placed by the FCC upon its retention of the
Licenses." In re NextWave, 200 F.3d at 54.

 Third, the Second Circuit found that besides interfering
with the Commission's licensing function through a collateral
proceeding, the bankruptcy court had in effect attempted to
exercise that function itself--again exceeding its jurisdiction:

By holding that for a price of $1.023 billion NextWave
would retain licenses for which it had bid $4.74 billion,
the bankruptcy ... court[ ] impaired the FCC's method
for selecting licensees by effectively awarding the Licens-
es to an entity that the FCC determined was not entitled
to them. In so doing [it] exercised the FCC's radio-
licensing function.... [E]ven if the bankruptcy ...
court[ ] [was] right in concluding that granting the Li-
censes at a small fraction of NextWave's original success-
ful bid price best effectuated the [Federal Communica-
tion Act's] goals, [it was] utterly without the power to
order that NextWave be allowed to retain them for that
reason or on that basis.

Id. at 55 (internal citations omitted).

Finally, notwithstanding its conclusion that the bankruptcy
court lacked jurisdiction to change the conditions under which
NextWave could retain its licenses, the Second Circuit ac-
knowledged that the bankruptcy court might well have juris-
diction over NextWave's underlying debts themselves: "To
the extent that the financial transactions between [the FCC
and NextWave] do not touch upon the FCC's regulatory
authority, they are indeed like the obligations between ordi-
nary debtors and creditors." Id. Pointing out that
NextWave "remain[ed] a debtor in bankruptcy," and that "[i]f
the Licenses [were] returned to the FCC, the bankruptcy
court [might] resolve resulting financial claims that the FCC
has against NextWave," id. at 56, the Second Circuit re-
viewed the merits of the bankruptcy court's avoidance deci-
sion and concluded that NextWave should not be allowed to
avoid $3.72 billion of its debt under the Bankruptcy Code.
Id. at 46, 62.

Immediately following the Second Circuit reversal,
NextWave prepared a new plan of reorganization that provid-
ed for a single lump sum payment to satisfy its entire $4.3
billion outstanding obligation to the Commission, including

interest and late fees. The Commission objected to the plan,
alleging that NextWave's licenses had automatically canceled
when the company missed its first payment deadline in
October 1998. See In re Pub. Notice DA 00-49, Auction of C
and F Block Broadband PCS Licenses, Order on Reconsider-
ation, FCC 00-335 p 7 (Sept. 6, 2000). Simultaneously, the
Commission issued a public notice announcing re-auction of
NextWave's licenses. The notice stated that the licenses
were "available for auction under the automatic cancellation
provisions" of the Commission's regulations. Public Notice,
Auction of C and F Block Broadband PCS Licenses, DA 00-
49, 15 FCC Rcd 693 (2000).

The dispute then returned to the bankruptcy court, which
declared the Commission's cancellation of NextWave's licens-
es "null and void" as a violation of various provisions of the
Bankruptcy Code, including the automatic stay provisions of
section 362(a). In re NextWave Pers. Communications, Inc.,
244 B.R. 253, 257-58, 267-68 (Bankr. S.D.N.Y. 2000)
("NextWave VI"). In reaching this conclusion, the bankrupt-
cy court acknowledged that under the Second Circuit's ruling,
it lacked jurisdiction to interfere with the Commission's regu-
latory acts. Id. at 260-61. It also acknowledged that it was
bound by the Second Circuit's decision that "a regulatory
purpose was implicit in the 'full payment requirement' in the
FCC regulations." Id. at 270. As the bankruptcy court saw
it, however, the "regulatory objective" behind the full pay-
ment requirement had been "fulfilled in the debtors' modified
Plan . . . . to pay the entire $4.3 billion outstanding ... in a
lump sum upon confirmation." Id. The cancellation of
NextWave's licenses, in contrast, was a response to the
company's failure to make a timely payment, and this re-
quirement, the court reasoned, was "purely economic," having
to do with "the time value of money." Id. "[T]he economic
consequence of delay," it stated, "will be fully cured by
payment in full of all applicable interest, penalties and late
fees...." Id. Further explaining its view that the timely
payment requirement lacked a regulatory purpose, the bank-
ruptcy court discussed at length its reasons for believing that
canceling licenses for failure to make a timely payment

"conflict[ed] with the spirit and the letter of the agency's
governing statute"--namely, section 309(j) of the Communica-
tions Act. Id. at 281; see also id. at 282-83, 271. Concluding
that the Commission "has not and cannot articulate any
regulatory interest entailed in the 'timely payment' require-
ment," id. at 270, the court ruled that the Second Circuit's
prior decision did not preclude it from declaring the cancella-
tion void. Id. at 283.

Again, the Second Circuit reversed. In re FCC, 217 F.3d
125 (2d Cir. 2000). Granting a mandamus petition filed by
the Commission, the court held that "[t]here can be little
doubt that if full payment is a regulatory condition, so too is
timeliness." Id. at 136. In the court's view, "the regulatory
purpose for requiring payment in full--the identification of
the candidates having the best prospects for prompt and
efficient exploitation of the spectrum--is quite obviously
served in the same way by requiring payment on time." Id.
at 135. The conclusion that the Commission's decision "was
in fact regulatory," the court went on, was "reinforced" by the
fact that the bankruptcy court, in deciding that the license
cancellation lacked a regulatory purpose, had explained at
length that the cancellation and re-auction were contrary to
the purposes of section 309(j) of the Communications Act.
Id. at 136. But according to the Second Circuit, these
discussions, rather than explaining why the re-auction deci-
sion was not regulatory, explained why, under the Communi-
cations Act, it was arbitrary, and such a determination, the
Second Circuit pointed out, was "outside the jurisdiction of
the bankruptcy court." Id. "[A] regulatory condition is a
regulatory condition even if it is arbitrary. It is for the FCC
to state its conditions of licensure, and for a court with power
to review the FCC's decisions to say if they are arbitrary or
valid." Id. at 137.

As a consequence, the Second Circuit concluded that the
bankruptcy court had both violated the appellate court's
earlier mandate and exceeded the bankruptcy court's own
jurisdiction. Id. "The bankruptcy court," the Second Circuit
stated, "construes our mandate to mean no more than that
the bankruptcy court may not abrogate the full-payment
requirement on the basis of a fraudulent conveyance holding."

Id. at 139. But this understanding "under-reads our previous
opinion." Id. That opinion "clearly instruct[ed] the bank-
ruptcy court to refrain from interfering with the licensing
decisions of the FCC," id., and as the Second Circuit saw it,
this is exactly what the bankruptcy court did in declaring the
license cancellation null and void. In addition, because "[e]x-
clusive jurisdiction to review the FCC's regulatory action lies
in the courts of appeals" under 47 U.S.C. s 402, In re FCC,
217 F.3d at 139, the Second Circuit found that the bankruptcy
court's license cancellation holding exceeded that court's jur-
isdiction. Id. at 141. The court also noted that "NextWave
remains free to pursue its challenge to the FCC's regulatory
acts" in another forum, pointing out that the company had
already filed "protective notices of appeal" in this court. Id.
at 140-41.

After losing in the Second Circuit, NextWave filed a peti-
tion with the Commission, requesting reconsideration of the
license cancellation. Denying the petition, the Commission
noted first that the public notice of reauction "was not an
order or action of the Commission ... canceling NextWave's
licenses." Order on Reconsideration, FCC 00-335 p 10.
Rather, "[p]ursuant to [Commission] rules, the licenses can-
celed automatically" after NextWave failed to make its first
installment payment. Id. The Commission thus concluded
that NextWave's petition was "late" and its challenge to the
reauction notice "procedurally defective." Id. "Neverthe-
less, because of the importance of the issues raised in
NextWave's petition," id., the Commission went on to address
the company's challenge to the automatic cancellation. The
Commission rejected NextWave's arguments that the cancel-
lation was arbitrary and capricious and barred by estoppel
and waiver, id. p p 11-33, and found that the company's
Bankruptcy Code arguments, having been "summarily reject-
ed by the Second Circuit," were "precluded under the doc-
trine of res judicata." Id. p 26.

NextWave now challenges the Commission's decision on
two basic grounds. First, it claims that the license cancella-
tion is "patently unlawful," Appellants' Opening Br. at 16,
under the provisions of the Bankruptcy Code described ear-

lier: the anti-discrimination provision (section 525), the auto-
matic stay provision (section 362), and the provision of the
Code allowing debtors to "cure" their defaults (section 1123).
Second, citing our decision in Trinity Broadcasting of Flori-
da, Inc. v. FCC, 211 F.3d 618, 631 (D.C. Cir. 2000), where
we held that an agency may not "sanction a company for its
failure to comply with regulatory requirements" without first
providing "fair notice" of those requirements, NextWave ar-
gues that even if the license cancellation is not barred by
the Bankruptcy Code, it is invalid because the Commission
failed to provide adequate notice that the timely payment
regulations apply to Chapter 11 debtors. The Commission,
supported by Intervenors (the Cellular Telecommunications
Industry Association and several telecommunications compa-
nies) defends its decision.

II

We begin with three threshold issues. Does our jurisdic-
tion in this case arise from 47 U.S.C. s 402(a) or 402(b)?
Was NextWave's challenge to its license cancellation timely?
And are NextWave's Bankruptcy Code arguments barred by
res judicata? We consider each question in turn.

Jurisdiction

NextWave has filed both a petition for review under section
402(a) and a notice of appeal under section 402(b) of the
Communications Act. Section 402(a) provides that "[a]ny
proceeding to enjoin, set aside, annul, or suspend any order of
the Commission under this chapter (except those appealable
under subsection (b) of this section) shall be brought" in a
court of appeals. See 47 U.S.C. s 402(a) (cross-referencing
28 U.S.C. s 2342(1)). Section 402(b), in contrast, provides:

Appeals may be taken from decisions and orders of the
Commission to the United States Court of Appeals for
the District of Columbia ... [b]y the holder of any
construction permit or station license which has been
modified or revoked by the Commission.

Id. s 402(b). Acknowledging that we have previously found
these two provisions mutually exclusive, see Friedman v.
FCC, 263 F.2d 493, 494 (D.C. Cir. 1959), NextWave asks us to
"dismiss the filing that relies on the incorrect jurisdictional
provision." Appellants' Opening Br. at 1.

In Mobile Communications Corp. of America v. FCC, we
decided that the term "station license" in section 402(b)
encompasses PCS licenses. See 77 F.3d 1399, 1403 (D.C. Cir.
1996); see also 47 U.S.C. s 153(42) (defining "station license"
as "that instrument of authorization required ... for the use
or operation of apparatus for transmission of energy, or
communications, or signals by radio"); id. s 153(33) (defining
"communication by radio" as "the transmission by radio of
writing, signs, signals, pictures, and sounds of all kinds").
Given this, we think section 402(b)'s plain language, permit-
ting appeal by "the holder of any ... station license which
has been ... revoked by the Commission," covers this case.
Cf. Cook, Inc. v. United States, 394 F.2d 84, 86 n.4 (7th Cir.
1968) (" 'The language of [subsection 402(b)], when considered
in relation to that of subsection (a) ... would make clear that
judicial review of all cases involving the exercise of the
Commission's radio-licensing power is limited to [the United
States Court of Appeals for the District of Columbia Cir-
cuit].' ") (quoting S. Rep. No. 82-44, at 11 (1951)); In re FCC,
217 F.3d at 140-41. Even if the Commission did not formally
"revoke" NextWave's licenses, that is certainly the effect of
the license cancellation: the licenses once assigned to
NextWave are now being re-auctioned to other bidders. Cf.
In re FCC, 217 F.3d at 140 n.10. We therefore dismiss the
section 402(a) petition and proceed with the section 402(b)
appeal.

Timeliness

Section 402(c) of the Communications Act requires appeals
under section 402(b) to be filed "within thirty days from the
date upon which public notice is given of the decision or order
complained of." 47 U.S.C. s 402(c). The "decision"
NextWave seeks to challenge is the Commission's cancellation
of its licenses, but the formal Commission action it actually
appeals is the public notice of re-auction, which itself cancels

no licenses, but rather announces in passing that the compa-
ny's licenses canceled automatically at an earlier date. Order
on Reconsideration, FCC 00-355 p 10.

The Commission acknowledges that "in some instances, it
may be proper for a party to challenge the Commission's
public notices that establish or deny rights." Id. Joined by
Intervenors, however, it argues that NextWave's challenge to
the license cancellation policy is untimely. Intervenors claim
that NextWave should have challenged the policy when its
licenses were issued, since the licenses themselves stated
explicitly that they were conditioned on timely payment, and
as we have held, "[a]cceptance of a license constitutes acces-
sion to all [license] conditions." P&R Temmer v. FCC, 743
F.2d 918, 928 (D.C. Cir. 1984). Alternatively, both Interve-
nors and the Commission suggest that NextWave should have
challenged the automatic cancellation rule during the Re-
structuring Order proceedings because during those proceed-
ings, the Commission considered objections to its original
installment payment plan (including some objections based on
the Bankruptcy Code), revised the plan, and ultimately reaf-
firmed the timely payment requirement. Intervenors' Br. at
3; see also, e.g., Order on Recons. of the Second Report and
Order, 13 FCC Rcd 8345 p 24. Having failed to challenge the
automatic cancellation rule at one of these earlier dates, they
argue, NextWave cannot do so now because orders denying
reconsideration do not re-open matters that should have been
challenged previously. See ICC v. Bhd. of Locomotive
Eng'rs, 482 U.S. 270, 279-80, 285-86 (1987).

As NextWave points out, however, we have held that "a
party against whom a rule is applied may, at the time of
application, pursue substantive objections to the rule ... even
where the petitioner had notice and opportunity to bring a
direct challenge within statutory time limits" but failed to do
so. Indep. Cmty. Bankers of Am. v. Bd. of Governors of the
Fed. Reserve Sys., 195 F.3d 28, 34 (D.C. Cir. 1999). Thus
even if NextWave could have challenged the automatic cancel-
lation policy at an earlier date--either when its licenses
issued or during the Restructuring Order proceedings--the
company remained free to do so "within thirty days from the

date upon which public notice [was] given" that the policy had
been applied to it. 47 U.S.C. s 402(c).

According to NextWave, the thirty-day period was trig-
gered by the public notice of re-auction because, prior to the
re-auction notice, "the FCC had done nothing whatsoever to
announce the cancellation of NextWave's licenses." Appel-
lants' Reply Br. at 6. Because it filed a precautionary appeal
with this court 30 days after the notice of re-auction,
NextWave claims, its appeal was timely. Disagreeing, Inter-
venors argue that NextWave already had notice in October
1998 that its licenses would cancel automatically if and when
it failed to make an installment payment. Thus, they argue,
no further Commission statement was required to trigger the
period for seeking judicial review.

Intervenors' argument assumes that notice of a future
event's automatic effect (here, the explicit warning that the
licenses would cancel for failure to make a timely payment) is
by itself sufficient notice to mean that the occurrence of the
future event (failing to make a timely payment) will trigger
the period for seeking judicial review under section 402(c).
To resolve the timeliness issue in this case, however, we need
not decide whether that assumption is correct, for we think it
was unclear prior to the notice of re-auction that the automat-
ic cancellation policy would apply to licensees who had filed
for bankruptcy. To begin with, the Bankruptcy Code gave
NextWave reason to doubt that the automatic cancellation
would actually occur when the company missed its first
payment in October 1998: the automatic stay triggered by a
Chapter 11 filing generally blocks most efforts by creditors to
exercise control over or repossess property of a debtor. See
11 U.S.C. s 362(a); cf. NextWave VI, 244 B.R. at 266-68
(finding that the automatic stay applied to NextWave's license
fee obligations). Neither the Commission nor Intervenors
point to any instance prior to the re-auction notice in which
the Commission actually announced that NextWave's licenses
had canceled despite the stay. Moreover, the Commission's
own conduct suggests that it was at best unsure whether the
automatic stay blocked cancellation of the company's licenses.
After the bankruptcy court's fraudulent conveyance holding,

and several months after NextWave missed the October
payment deadline, the Commission moved the bankruptcy
court to lift the stay "so that the ... automatic cancellation
provisions may take effect." Mot. to Lift Automatic Stay at
2, NextWave V, 235 B.R. 314 (No. 98 B 21529). And in the
bankruptcy court, Commission counsel suggested that the
automatic stay blocked cancellation of NextWave's licenses,
stating for example that although "[t]he regulations provide
that upon failure to make the payments the license is auto-
matically canceled[,] ... [t]hat hasn't [happened] in this case
due to the automatic stay." See Hearing Tr. at 30, In re
NextWave Pers. Communications, Inc., No. 98 B 21529
(Bankr. S.D.N.Y. Nov. 12, 1998); NextWave VI, 244 B.R. at
277 (noting that transcript erroneously attributes this quota-
tion to the Court).

These circumstances suggest that the Commission believed
NextWave's licenses had not canceled prior to the notice of
re-auction. At the very least, they created doubt about the
matter, and as we have held, "when an agency leaves room
for genuine and reasonable doubt as to the applicability of its
orders or regulations, the statutory period for filing a petition
for review is tolled until that doubt is eliminated." Recre-
ation Vehicle Indus. Ass'n v. EPA, 653 F.2d 562, 569 (D.C.
Cir. 1981). Because the "genuine and reasonable doubt"
about the status of NextWave's licenses continued until the
Commission issued the notice of re-auction, we conclude that
NextWave's petition is timely.

Res Judicata

This brings us to the final and most difficult threshold
issue: whether NextWave's Bankruptcy Code arguments are
barred by res judicata. "The doctrine of res judicata pre-
vents repetitious litigation involving the same causes of action
or the same issues." I.A.M. Nat'l Pension Fund v. Indus.
Gear Mfg. Co., 723 F.2d 944, 946 (D.C. Cir. 1983). According
to the Commission, because NextWave litigated and lost its
Bankruptcy Code arguments in the Second Circuit mandamus
proceedings, it may not relitigate them here. Asserting a

right to make these arguments here, NextWave argues that
the Second Circuit's decision was jurisdictional--a decision
about "where NextWave's bankruptcy challenges should be
decided, not how they should be resolved." Appellants' Open-
ing Br. at 26 (emphasis added). As a result, the company
argues, res judicata does not bar it from presenting its
Bankruptcy Code arguments in this court.

The doctrine of res judicata "usually is parsed into claim
preclusion and issue preclusion." I.A.M. Nat'l Pension
Fund, 723 F.2d at 946. Because the Commission raises
arguments based on both theories, and because the two
theories differ in subtle but significant respects, we consider
each separately. "Under the claim preclusion aspect of res
judicata, a final judgment on the merits in a prior suit
involving the same parties or their privies bars subsequent
suits based on the same cause of action." Id. at 946-47.
Claim preclusion prevents parties from relitigating issues
they raised or could have raised in a prior action on the same
claim. See Allen v. McCurry, 449 U.S. 90, 94 (1980). "[D]is-
missals for lack of jurisdiction," however, "are not decisions
on the merits and therefore have no [claim preclusive] effect
on subsequent attempts to bring suit in a court of competent
jurisdiction." Kasap v. Folger Nolan Fleming & Douglas,
Inc., 166 F.3d 1243, 1248 (D.C. Cir. 1999); see also Fed R.
Civ. P. 41(b) ("a dismissal under this subdivision and any
dismissal not provided for in this rule, other than a dismissal
for lack of jurisdiction ... operates as an adjudication upon
the merits").

No one disputes that the Second Circuit thought the bank-
ruptcy court lacked authority to declare the notice of re-
auction invalid. In re FCC, 217 F.3d at 141. The question
dividing the parties is why the Second Circuit thought this.
According to NextWave, the Second Circuit reversed the
bankruptcy court because under section 402 of the Communi-
cations Act, "the FCC's licensing decisions are subject to the
exclusive jurisdiction of the federal courts of appeals." Id. at
129. In other words, the company claims, the Second Circuit
held that any arguments directly or collaterally challenging
the Commission's regulatory actions--including arguments

based on the Bankruptcy Code--must be brought in a court
of appeals. Cf. In re NextWave, 200 F.3d at 55. The
Commission has a different view of the Second Circuit's
decision. It argues that the Second Circuit decided not that
the bankruptcy court lacked jurisdiction to determine wheth-
er the license cancellation violated the Bankruptcy Code, but
rather that "the [Bankruptcy Code] provisions on which
NextWave relies do not reach regulatory actions such as
those at issue here." Appellee's Br. at 15. In other words,
the Commission claims that the Second Circuit reviewed the
bankruptcy court's Bankruptcy Code conclusions on the mer-
its and found that because the Commission's actions were
regulatory, the automatic stay, right to cure, and anti-
discrimination provisions of the Code did not reach those
actions.

We agree with NextWave's interpretation of the Second
Circuit's decision. As we read that decision, the court princi-
pally held that the Commission's license cancellation was a
regulatory act reviewable only by a court of appeals under
section 402 of the Communications Act, and thus that the
bankruptcy court lacked jurisdiction to apply the Code to
these acts. With one exception (which we shall explain later),
we do not understand the Second Circuit to have decided as a
substantive matter that nothing in the Bankruptcy Code
prevents the Commission from canceling NextWave's licens-
es.

To begin with, and most obviously, the Second Circuit
repeatedly stated that it was making a "jurisdictional" deci-
sion based on section 402. Here are just three examples:
"We recognized that pursuant to ... 47 U.S.C. s 402, review
of the FCC's regulatory decisions and orders is entrusted
solely to the federal courts of appeals and is therefore outside
the jurisdiction of the bankruptcy and district courts," In re
FCC, 217 F.3d at 131 (describing initial opinion); " '[b]ecause
jurisdiction over claims brought against the FCC in its regu-
latory capacity lies exclusively in the federal courts of ap-
peals, see ... 47 U.S.C. s 402, the bankruptcy and district
courts lacked jurisdiction to decide the question of whether
NextWave had satisfied the regulatory conditions placed by

the FCC upon its retention of the Licenses,' " id. at 137
(quoting initial opinion); "[e]xclusive jurisdiction to review
the FCC's regulatory action lies in the courts of appeals," id.
at 139 (citing cases discussing section 402). Reinforcing the
jurisdictional nature of its opinion, the Second Circuit also
disavowed any intent to rule on the merits of NextWave's
challenges to the Commission's acts, stating explicitly that
NextWave was "free to pursue its challenge to the FCC's
regulatory acts" in an appropriate forum, id. at 140, and that
the court was making "no comment on the prospects" of such
an appeal. Id. at 129; see also id. at 138 n.8 ("we have no
occasion to opine on whether the Public Notice is valid or
whether the Licenses automatically canceled at some prior
date"); id. at 139 ("Even if the bankruptcy court is right on
the merits of its arguments against revocation--we have no
occasion to express an opinion--it is without power to act on
its determination.").

According to the Commission, these repeated references to
the bankruptcy court's lack of jurisdiction mean only that the
bankruptcy court lacked jurisdiction to decide whether the
Commission had applied the auction requirements of section
309(j) of the Communications Act arbitrarily and capriciously,
not that it lacked jurisdiction to review the Commission's
actions for compliance with the Bankruptcy Code. Likewise,
the Commission suggests, the Second Circuit's references to
the prospects of NextWave's appeal refer only to an appeal
based on section 309(j). In support of this interpretation, the
Commission points to language in the Second Circuit's opin-
ion suggesting that the bankruptcy court lacked jurisdiction
to question the Commission's regulatory judgments under
section 309(j). See, e.g., id. at 131-32 (" '[E]ven if the bank-
ruptcy and district courts were right in concluding that
granting the Licenses at a small fraction of NextWave's
original successful bid price best effectuated the [Federal
Communication Act's] goals, they were utterly without the
power to order that NextWave be allowed to retain them for
that reason or on that basis.' ") (quoting initial opinion); see
also id. at 136-37.

 The Second Circuit, however, had good reason to address
section 309(j) directly: the bankruptcy court devoted several
paragraphs to evaluating the Commission's conduct in light of
that section. See NextWave VI, 244 B.R. at 271, 281-83.
Moreover, it is perfectly consistent to hold that section 402
prohibits the bankruptcy court from reviewing Commission
action both under section 309(j) and under the Bankruptcy
Code. True, as the Commission points out, other circuits
have recognized the jurisdiction of bankruptcy courts to
determine whether provisions of the Code such as the auto-
matic stay apply to agency actions. See, e.g., Commerce Oil
Co. v. Word (In re Commerce Oil Co.), 847 F.2d 291 (6th Cir.
1988); Universal Life Church, Inc. v. United States (In re
Universal Life Church, Inc.), 128 F.3d 1294 (9th Cir. 1997).
But that is irrelevant to the question we face here: how did
the Second Circuit view the bankruptcy court's jurisdiction?
Regardless of how other circuits--or even we--might inter-
pret section 402, we think the Second Circuit construed the
provision to confer "exclusive jurisdiction" on courts of ap-
peals to review even Bankruptcy Code challenges to the
Commission's regulatory acts. Many of the court's refer-
ences to section 402 are not clearly restricted to bankruptcy
court power under section 309(j). See, e.g., In re FCC, 217
F.3d at 139 ("Exclusive jurisdiction to review the FCC's
regulatory action lies in the courts of appeals."). And at least
once in its opinion, the Second Circuit expressly stated that
"[t]he bankruptcy court lacked jurisdiction to declare the
Public Notice [of reauction] null and void on [the] ground[s]
that the Public Notice violated the automatic stay, [or] that
the right to cure obviates any default"--that is, on Bankrupt-
cy Code grounds. Id. at 139 (emphasis added).

The Second Circuit's reasoning in granting mandamus fur-
ther illustrates the jurisdictional nature of its opinion. The
court overturned the bankruptcy court's decision on two
"independently sufficient" grounds, each discussed in a sepa-
rate section of the opinion. See id. at 141. One ground was
that the bankruptcy court lacked "statutory jurisdiction" to
nullify the Commission's license cancellation. Id. Entitled
"Jurisdiction," this section of the opinion consists entirely of a

discussion of sections 402(a) and (b) of the Communications
Act--it never mentions the Bankruptcy Code. Id. at 139-41.
If, as the Commission maintains, the Second Circuit thought
the bankruptcy court lacked authority to invalidate the li-
cense cancellation principally because the Code does not
reach the Commission's regulatory acts (and if, as the Com-
mission also maintains, the Second Circuit's discussion of
"jurisdiction" merely refers to the peripheral issue of the
bankruptcy court's jurisdiction to review Commission actions
under section 309(j) of the Communications Act) it is difficult
to explain why the court failed to discuss the Bankruptcy
Code in this section of its opinion, given that the reasons
discussed here provide an "independently sufficient" basis for
mandamus.

The Second Circuit's other reason for granting mandamus
was that the bankruptcy court violated the appellate court's
earlier mandate. But as the Second Circuit made clear, its
initial opinion too was jurisdictional:

Our extraordinary mandamus power has two purposes:
to achieve compliance with the terms and spirit of our
mandates, and to constrain inferior courts to proper
exercises of their jurisdiction. In this case, the two uses
of mandamus overlap and reinforce one another. This
Court's previous opinion reversed a decision of the bank-
ruptcy court on the ground that that court lacked juris-
diction. The bankruptcy court again seeks to control the
FCC's allocation of licenses, notwithstanding this Court's
express holding that 'the bankruptcy and district courts
lack[ ] jurisdiction to decide the question of whether
NextWave had satisfied the regulatory conditions placed
by the FCC upon its retention of the Licenses.' Thus a
writ of mandamus protecting this Court's mandate also
confines the inferior court to the lawful exercise of its
jurisdiction.

Id. at 137 (quoting In re NextWave, 200 F.3d at 54).

To be sure, in the "mandate" section of its opinion, the
Second Circuit appeared to decide on the merits that at least
some parts of the automatic stay provision of the Bankruptcy

Code, 11 U.S.C. s 362, do not apply to the facts of this case.
See In re FCC, 217 F.3d at 138 ("Undoubtedly, the [Commis-
sion] is a governmental unit that is seeking 'to enforce' its
'regulatory power' [under subsection 362(b)(4)]."); id at 138
n.8 ("[W]e hold that the FCC's regulatory decisions fall within
[subsection] 362(b)(4)."). But leaving aside for the moment
the effect of this discussion under the doctrine of issue
preclusion, this portion of the Second Circuit's opinion does
not change our view that the court's decision was primarily
jurisdictional, for the court expressly couched its discussion of
the automatic stay in jurisdictional terms: the court prefaced
its discussion by noting that "[t]he bankruptcy court founds
its jurisdiction [to interfere with the FCC's enforcement of
its payment schedule] chiefly on the automatic stay provision
of [section 362]...." Id. at 138 (emphasis added). We need
not decide whether this jurisdictional interpretation of section
362 is correct--the Supreme Court has declined to express an
opinion on the issue, see Bd. of Governors of the Fed. Reserve
Sys. v. MCorp Fin., Inc., 502 U.S. 32, 41 n.11 (1991)--because
the Commission's res judicata argument requires only that we
determine what the Second Circuit meant, and here we think
it clear that the court treated section 362 as though it
provided a potential basis for bankruptcy court jurisdiction.

In addition to this direct evidence of the jurisdictional
nature of the Second Circuit opinion, the Commission's alter-
nate view of the opinion--that the court decided as a substan-
tive matter that nothing in the Bankruptcy Code prevents the
Commission from canceling NextWave's licenses--is implausi-
ble. Not only does this interpretation fail to account fully for
the opinion's jurisdictional language, see supra at 21-22, but
the Second Circuit never actually states that the Bankruptcy
Code as such does not reach the Commission's regulatory
acts: the entire opinion concerns the power and jurisdiction
of the bankruptcy court. Perhaps most telling, the Second
Circuit does not discuss any provision of the Bankruptcy
Code besides section 362, despite the fact that the bankruptcy
court discussed section 525 and made a ruling based on
sections 1123 and 1124. As NextWave argues, "[t]he exclu-
sively jurisdictional character of the Second Circuit's ruling

provides a complete explanation for its ... silence respecting
NextWave's principal bankruptcy arguments." Appellants'
Reply Br. at 4.

Faced with the Second Circuit's silence about sections 525
and 1123, the Commission suggests that even though the
court failed to mention these provisions, it necessarily decided
that they do not bar the license cancellation because "manda-
mus relief is warranted only where the petitioner has demon-
strated that its right to such relief is clear and indisputable,"
and "the Second Circuit would not have granted our request
for extraordinary relief if it had thought that the bankruptcy
court's decision was sustainable on the basis of [section] 525"
or 1123. Appellee's Br. at 21 n.13 (internal quotation omit-
ted); id. at 24 n.15. The assumption that the Second Circuit
"necessarily" resolved these arguments, however, is valid only
if the Commission's view of the case is correct--that is, if the
Second Circuit meant to decide as a substantive matter that
the Bankruptcy Code did not reach the Commission's actions.
If instead the Second Circuit principally decided, as much of
the opinion's language suggests, see supra at 20-22, that the
bankruptcy court lacked jurisdiction to hear these arguments,
that conclusion would also have provided a basis for manda-
mus, without requiring the court to consider or decide any-
thing about sections 525 and 1123 at all.

The Commission offers a second, equally unpersuasive ex-
planation for the Second Circuit's silence regarding sections
525 and 1123. The bankruptcy court's analysis of those
provisions, the Commission says, "hinges on its characteriza-
tion of the FCC as an ordinary creditor," Appellee's Br. at 24,
and by rejecting decisively this characterization, the Second
Circuit in effect decided that these parts of the Code do not
apply. Apart from the fact that it seems odd that the Second
Circuit would have decided that sections 525 and 1123 do not
apply without ever mentioning them, this argument fails
because, like the previous argument, it assumes the correct-
ness of the Commission's reading of the Second Circuit's
opinion. But the alternate reading of the opinion--that the
bankruptcy court lacked jurisdiction to hear challenges to the
Commission's regulatory actions based on the Bankruptcy

Code or otherwise--also relies upon the notion that the
Commission is not an ordinary creditor but a regulator in this
situation. The fact that the Second Circuit decided that the
Commission was not acting as an ordinary creditor when it
canceled the licenses thus does not indicate that the court
implicitly decided that sections 525 and 1123 are inapplicable
to this case.

Having thus concluded that the Second Circuit's opinion
was jurisdictional and that claim preclusion does not bar
NextWave from re-litigating its Bankruptcy Code arguments
in this court, we turn to the Commission's second major res
judicata argument: that each of NextWave's Bankruptcy
Code arguments is barred by issue preclusion. "Under the
issue preclusion aspect of res judicata, a final judgment on
the merits in a prior suit precludes subsequent relitigation of
issues actually litigated and determined in the prior suit,
regardless of whether the subsequent suit is based on the
same cause of action." I.A.M. Nat'l Pension Fund, 723 F.2d
at 947. Issue preclusion is most often invoked where "a
subsequent action is brought on a different claim," id. at 947
n.3, and as a result claim preclusion does not apply. Issue
preclusion, however, may also apply to subsequent actions
brought on the same claim: if a judgment "does not preclude
relitigation of all or part of the claim on which the action was
brought"--if, for example, as here, the judgment was jurisdic-
tional--it may still preclude relitigation of any issues "actual-
ly litigated and determined" in the first action. Id. For
issue preclusion to apply, however, "the issue must have been
actually and necessarily determined by a court of competent
jurisdiction in the first trial." Connors v. Tanoma Mining
Co., 953 F.2d 682, 684 (D.C. Cir. 1992) (internal quotation and
emphasis omitted). If the "basis" of a prior decision is
"unclear, and it is thus uncertain whether the issue was
actually and necessarily decided in [the prior] litigation, then
relitigation of the issue is not precluded." Id.

It may appear that the only issue potentially barred by
issue preclusion from a case dismissed for lack of jurisdiction
is the jurisdictional determination itself. Cf. Kasap, 166 F.3d
at 1248. In this case, it may thus seem that the Second

Circuit cannot have ruled on the merits of any of NextWave's
Bankruptcy Code arguments, because the court only decided
that the bankruptcy court lacked jurisdiction to hear them.
And indeed, under our jurisdictional interpretation of the
Second Circuit's decision, we do not think the court "actually
and necessarily" decided whether sections 525 and 1123 bar
the license cancellation. We thus conclude that issue preclu-
sion does not bar relitigation of these issues.

Far less clear, however, is whether issue preclusion bars
NextWave's section 362 argument. As we have seen, the
Second Circuit explicitly discussed section 362's automatic
stay, finding that the bankruptcy court could not rely on the
provision as an independent basis for jurisdiction because the
license cancellation was a regulatory act exempt under sub-
section 362(b)(4). See supra at 23-24. It is true, as we have
said, that this was a jurisdictional discussion, but this does
not preclude it from having issue preclusive effect: if a court
makes a substantive determination in order to arrive at a
jurisdictional holding, the substantive determination can have
issue preclusive effect so long as it was "actually litigated and
determined in the prior action." See I.A.M. Nat'l Pension
Fund, 723 F.2d at 947 n.3. The Restatement gives the
following example:

A brings an action against B for personal injuries arising
out of an automobile accident. Jurisdiction is asserted
over B, a nonresident, on the basis that the automobile
involved in the accident was being operated in the state
by or on his behalf. After trial of this issue, the action is
dismissed for lack of jurisdiction. In a subsequent action
by A against B for the same injuries, brought in the state
of B's residence, the prior determination that the auto-
mobile was not being operated by or on behalf of B is
conclusive.

Restatement (Second) of Judgments s 27, illustration 3
(1980).

Here, the Second Circuit appears to have decided that
section 362 does not confer jurisdiction on the bankruptcy
court because subsection 362(b)(4)'s "regulatory power" ex-

ception applies as a substantive matter. We thus agree with
the Commission that issue preclusion bars NextWave from
relitigating the question of whether the license cancellation
falls within subsection 362(b)(4). The Second Circuit spoke
clearly and unequivocally about this issue, stating that "[u]n-
doubtedly, the FCC is a governmental unit that is seeking 'to
enforce' its 'regulatory power,' " In re FCC, 217 F.3d at 138,
and that "we hold that the FCC's regulatory decisions fall
within [subsection] 362(b)(4)." Id. at n.8. And under the
Second Circuit's jurisdictional reading of section 362, this
decision was necessary to the case: if subsection 362(b)(4) did
not apply, section 362 could have provided a basis for the
bankruptcy court to assert jurisdiction over the license can-
cellation. In considering NextWave's Bankruptcy Code argu-
ments, see Section III infra, we will thus assume that the
license cancellation falls within the regulatory power excep-
tion to the automatic stay.

We are less sure, however, that the Second Circuit "actual-
ly and necessarily" decided as part of its jurisdictional deci-
sion that all provisions of section 362 do not apply to the
license cancellation. In particular, as the Second Circuit
implicitly acknowledged, subsection 362(b)(4)'s "regulatory
power" exception does not apply to subsections 362(a)(4) and
(5), which stay actions to enforce liens. See In re FCC, 217
F.3d at 138. Although the bankruptcy court thought the
cancellation of NextWave's licenses "unarguably violate[d]"
these subsections, NextWave VI, 244 B.R. at 267, and explicit-
ly quoted the language in the security agreements creating a
"first lien on and continuing security interest in" the licenses,
id. at 267 n.7, the Second Circuit, in a footnote, simply observed:
"Subsections (4) and (5) are concerned with liens. The bank-
ruptcy court does not explain why they are implicated here."
In re FCC, 217 F.3d at 138 n.7. Thus, unlike in its subsection
362(b)(4) discussion, the Second Circuit never said it was
"hold[ing]" that subsections 362(a)(4) and (5) do not apply to
the cancellation of NextWave's licenses. Cf. id. at 138 n.8.
Instead, the court merely observed that the bankruptcy court
did not explain why they are implicated. It is thus unclear
whether the Second Circuit decided that subsections 362(a)(4)

and (5) do not block cancellation of NextWave's licenses, or
whether it simply concluded that it had no need to reach the
issue because the bankruptcy court failed adequately to ad-
dress it. Since under our decision in Connors, if it is "uncer-
tain whether [an] issue was actually and necessarily decided
in [prior] litigation, then relitigation of the issue is not
precluded," 953 F.2d at 684, we conclude that NextWave is
not barred from arguing that subsections 362(a)(4) and (5)
prohibit cancellation of its licenses.

Having resolved these threshold issues, we turn to the
merits of NextWave's appeal.

III

NextWave argues that the Commission's cancellation of its
licenses violated sections 525, 1123, and 362 of the Bankrupt-
cy Code. Under the Administrative Procedure Act, we must
"hold unlawful and set aside agency action ... found to be
... not in accordance with law [or] ... in excess of statutory
jurisdiction, authority, or limitations." 5 U.S.C. s 706(2).
This provision requires us to invalidate agency action not only
if it conflicts with an agency's own statute, but also if it
conflicts with another federal law. See, e.g., Scheduled Air-
lines Traffic Offices, Inc. v. Dep't of Def., 87 F.3d 1356, 1361
(D.C. Cir. 1996) (applying 5 U.S.C. s 706(2)(A) and declaring
Department of Defense policy invalid under Miscellaneous
Receipts statute); see also Cousins v. Sec'y of the U.S. Dep't
of Transp., 880 F.2d 603, 608 (1st Cir. 1989) (stating that the
quoted passages from section 706 are "general in their mean-
ing" and "do not restrict the courts to consideration of the
agency's own enabling statute").

We begin with section 525:

[A] governmental unit may not deny, revoke, suspend, or
refuse to renew a license ... or other similar grant to,
... discriminate with respect to such a grant against,
deny employment to, terminate the employment of, or
discriminate with respect to employment against, a per-
son that is ... a bankrupt or a debtor under the Bank-
ruptcy Act ... solely because such bankrupt or debtor

 ... has not paid a debt that is dischargeable in the case
under this title or that was discharged under the Bank-
ruptcy Act.

11 U.S.C. s 525(a). No one disputes that the Commission is
a "governmental unit" that has "revoke[d]" a license for
purposes of section 525, nor that NextWave is a "bankrupt or
a debtor under the Bankruptcy Act." Pointing to the fact
that the Commission has filed proofs of claim in bankruptcy
court based on its security interests in PCS licenses, see, e.g.,
Proof of Claim, In re NextWave Pers. Communications, Inc.,
No. 98 B 21529 (Bankr. S.D.N.Y. Dec. 16, 1998) (filed on
behalf of creditor The United States of America), NextWave
argues that the installment payment obligations were dis-
chargeable debts under the Bankruptcy Code. See 11 U.S.C.
s 1141(d) (stating that dischargeable debts under Chapter 11
generally include "any debts that arose before the date of ...
confirmation" of the debtor's reorganization plan). And be-
cause failure to make installment payments was the "sole
triggering mechanism" for automatic cancellation, NextWave
continues, its licenses canceled "solely because" it failed to
pay dischargeable debts. Appellants' Reply Br. at 8.

The Commission never denies that if NextWave had made
its payments, the company could have retained its licenses.
Nor does the Commission dispute that NextWave's license fee
obligations were at least in part genuine, enforceable debts--
indeed, the Commission's own regulations provide for their
collection if left unpaid. See 47 C.F.R. s 1.2110(g)(4)(iv) ("A
licensee in the PCS C or F [B]locks shall be in default, its
license shall automatically cancel, and it will be subject to
debt collection procedures, if the payment due on the payment
resumption date ... is more than ninety (90) days delin-
quent.") (emphasis added). Instead, the Commission offers a
series of unpersuasive arguments intended to demonstrate
why, notwithstanding section 525's apparent applicability, the
provision does not bar cancellation of NextWave's licenses.

First, the Commission urges us to read section 525 in light
of section 362. The latter section, the Commission suggests,
"serves the important purpose of providing a debtor with

some breathing room in the situations to which it applies.
Accordingly, [section] 362 should be broader than [section]
525, providing for breathing room even in some situations
where cancellation ultimately would be permitted." Appel-
lee's Br. at 21-22. Thus, the Commission argues, because (on
its reading) the automatic stay does not apply to this case,
section 525 should not apply either. Fleshing out this argu-
ment, Intervenors suggest that "[i]t would make little sense
for Congress to exempt governmental 'regulatory' actions
from the stay [under subsection 362(b)(4)] but then flatly
forbid them in [section] 525. Basic structural coherence
requires the conclusion that [section] 525 does not prevent a
license cancellation already correctly found exempt from the
stay as regulatory." Intervenors' Br. at 18.

This is an interesting argument, but it fails for several
reasons. To begin with, it is inconsistent with section 525's
plain language. Section 525 clearly and explicitly prohibits
governmental units, for whatever reason, from canceling li-
censes for failure to pay a dischargeable debt: "a governmen-
tal unit may not ... revoke ... a license ... to ... a
bankrupt ... solely because such bankrupt ... has not paid a
debt that is dischargeable ... under this title." 11 U.S.C.
s 525(a). Nothing in section 525 or 362 states that section
525 is subject to subsection 362(b)(4)'s regulatory power
exception, or that the exception should be read to limit
section 525's clear reach. Thus, while interpretation of the
Bankruptcy Code is a "holistic endeavor," and "[a] provision
that may seem ambiguous in isolation" can often be "clarified
by the remainder of the statutory scheme," United Sav. Ass'n
of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S.
365, 371 (1988), here we see no such ambiguity. Various
bankruptcy and district courts, accordingly, have held that
section 525 can apply even if the automatic stay does not.
See, e.g., William Tell II, Inc. v. Illinois Liquor Control
Comm'n (In re William Tell II, Inc.), 38 B.R. 327, 330 (N.D.
Ill. 1983) ("even if a state proceeding is not automatically
stayed, a bankruptcy court has authority to enjoin certain
conduct under 11 U.S.C. s 525"); In re The Bible Speaks, 69
B.R. 368, 373 n.5 (Bankr. D. Mass. 1987) ("[Section] 525(a) is

directed at governmental units and may apply even where the
automatic stay has no effect.").

Moreover, contrary to Intervenors' argument, this interpre-
tation of section 525 does not render the Code "structural[ly]
[in]coheren[t]." Though this reading does mean that an
action exempted under subsection 362(b)(4) might nonetheless
be barred by section 525, it does not render subsection
362(b)(4) meaningless, because that subsection covers a differ-
ent and wider variety of actions than section 525. For
example, subsection 362(b)(4) exempts from the automatic
stay (among other things) "any act" by a governmental unit
to "obtain possession of property of the estate ... or to
exercise control over property of the estate," so long as the
act is taken to enforce the unit's "regulatory power." 11
U.S.C. s 362(a)(3), (b)(4) (emphasis added). Section 525, in
contrast, prohibits governmental units only from taking cer-
tain specific actions with respect to an extremely limited
subset of a debtor's property--licenses and similar grants--
or with respect to employment opportunities.

Even if the Commission were correct that section 525
should be read to permit all actions exempted from the
automatic stay by subsection 362(b)(4), that argument would
be inapplicable to this case because subsection 362(b)(4) does
not apply to the stay of acts to "create, perfect, or enforce"
liens against property of the estate or of the debtor imposed
by subsections 362(a)(4) and (5). Here, NextWave executed
security agreements giving the Commission a "first lien" on
the company's interest in the licenses, and under subsections
362(a)(4) and (5), "a creditor holding a lien on property of the
estate may not enforce the lien by seizure, foreclosure, or
otherwise." 3 Collier on Bankruptcy p 362.03[6] (15th ed.
rev. 2000). Stayed actions include "self-help remedies against
collateral" such as "repossession." Id. p 362.03[6][b]. Before
the bankruptcy court, Commission counsel acknowledged that
canceling the licenses and seeking to collect on the debt was
"tantamount ... to foreclosing on collateral." Hearing Tr. at
14, In re NextWave Pers. Communications, Inc., No. 98 B
21529 (Bankr. S.D.N.Y. May 26, 1999). Thus, contrary to the
Commission's argument, and notwithstanding the applicability

of the regulatory power exception, section 362's automatic
stay does apply here. This is thus not a case in which section
525, if applicable, would bar an action exempt from the
automatic stay.

The Commission next argues that section 525 is inapplica-
ble because NextWave's license fee obligation was not a
"dischargeable" debt. In support of this proposition, the
Commission offers two arguments. First, it claims that the
New York bankruptcy court could not have discharged
NextWave's debt because the Second Circuit, whose decisions
are binding on that court, held in its initial opinion that so
long as NextWave retained its licenses, its payment obligation
was subject to neither modification nor discharge in bank-
ruptcy. As a result, the Commission concludes, the payment
obligation was not a debt "dischargeable" in bankruptcy while
the license was held.

We disagree. To begin with, it is unclear that the Second
Circuit in fact thought the bankruptcy court lacked power to
alter or discharge the payment obligation while NextWave
held the licenses. Though parts of its initial opinion do
suggest this, see In re NextWave, 200 F.3d at 56, other parts
suggest that the court simply thought the bankruptcy court
had no authority to require the Commission to allow
NextWave to keep its licenses after modification of its pay-
ment obligation. See, e.g., id. at 54 ("It is beyond the
jurisdiction of a court in a collateral proceeding to mandate
that a licensee be allowed to keep its license despite its failure
to meet the conditions to which the license is subject."). If
the latter reading is correct, then insofar as NextWave's
payment obligation was a debt (as opposed to a license
condition), it was dischargeable by the bankruptcy court.
Even if the Commission's reading of the Second Circuit's
opinion is correct, the Commission's argument assumes that
the phrase "debt that is dischargeable ... under this title" in
section 525(a) refers to the bankruptcy court's power to
modify or discharge a payment obligation. The provision's
plain language, however, refers to a payment obligation that
can be modified or discharged under the Bankruptcy Code;
and as we read the Second Circuit's opinion, the court merely

decided that insofar as timely payment was a condition for
license retention, the bankruptcy court had no authority to
modify it. It never decided that a court of competent juris-
diction (such as this one) could not modify or discharge it
under section 525.

The Commission also argues that because "[a] licensee's
full and timely payment of its winning bid installments is an
essential condition of its license grant[,] [p]ayment ... is a
regulatory requirement, not a dischargeable debt." Appel-
lee's Br. at 22. At oral argument, Commission counsel con-
ceded that the payment obligation also has the character of a
dischargeable debt. As we indicated earlier, the Commission
could seek to collect its license fee, and in so doing it would be
subject (as the Second Circuit held) to the constraints im-
posed on creditors by the Bankruptcy Code. See In re
NextWave, 200 F.3d at 56. But here, the Commission con-
tends, it seeks only to revoke NextWave's licenses, not to
collect on the debt, and insofar as timely payment is a
condition of license retention, it is a regulatory requirement,
not a dischargeable debt, and section 525 is inapplicable.

As Commission counsel also acknowledged, this claim
amounts to a request for a regulatory purpose exception to
section 525: the Commission in effect argues that because
(for legitimate regulatory motives) it made timely payment a
regulatory requirement, it should be permitted to cancel
licenses for failure to meet that requirement despite section
525's plain language ("a governmental unit may not ...
revoke ... a license ... to ... a bankrupt ... solely because
such bankrupt ... has not paid a debt that is dischargeable
... under this title"). But basic principles of statutory
interpretation preclude such a result. To begin with, section
525 contains several exceptions, but none for agencies fulfill-
ing regulatory purposes. See 11 U.S.C. s 525(a) ("Except as
provided in the Perishable Agricultural Commodities Act ...
the Packers and Stockyards Act ... and section 1 of ... 'An
Act making appropriations for the Department of Agriculture
for the fiscal year ending June 30, 1944, and for other
purposes' ... a governmental unit may not deny, revoke,
suspend ... a license...."). This in itself suggests that
Congress did not intend to provide a regulatory purpose
exception to section 525. See Tenn. Valley Auth. v. Hill, 437
U.S. 153, 188 (1978) (relying on fact that Endangered Species

Act "creates a number of limited 'hardship exemptions' " but
none for federal agencies to conclude "under the maxim
expressio unius est exclusio alterius ... that these were the
only 'hardship cases' Congress intended to exempt"). More-
over, other parts of the Bankruptcy Code contain explicit
regulatory purpose exceptions. Section 362, as we have seen,
exempts from certain provisions of the automatic stay any
"governmental unit" exercising its "police or regulatory pow-
er." 11 U.S.C. s 362(b)(4). Section 362 also contains a series
of narrower exceptions for certain named agencies that have
entered lending relationships, allowing them to engage in
particular acts of foreclosure and other actions. See, e.g., 11
U.S.C. s 362(b)(8) (exception permitting HUD Secretary to
foreclose on certain mortgages insured under the National
Housing Act). To us, these express exceptions demonstrate
that section 525 contains neither an implied regulatory power
exception for governmental units in general nor an implied
agency-specific exception allowing the Commission to enforce
an automatic cancellation policy pursuant to an installment
payment scheme under section 309(j) of the Communications
Act. See Russello v. United States, 464 U.S. 16, 23 (1983)
("Where Congress includes particular language in one section
of a statute but omits it in another section of the same Act, it
is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.") (internal
quotation omitted).

Next, Intervenors argue that even if the license fee obli-
gation itself is a dischargeable debt, the Commission did not
cancel NextWave's licenses "solely because" of failure to pay
that debt. "The 'solely because' language," they argue, "lim-
its the bar on license revocation to circumstances where a
government [agency] is simply advancing creditor interests in
receiving the money due." Intervenors' Br. at 16-17. Since
here, license cancellation was intended not to induce payment
but instead to "protect[ ] the integrity of [the] auction[ ] and
select[ ] the applicant most likely to use the Licenses effi-
ciently for the benefit of the public," section 525 is not
implicated, because "it is not the 'debt' character of the
defaulted obligation that is the 'sole' basis for the cancella-
tion." Id. (internal quotation omitted).

 We are unconvinced. Intervenors argue that "solely be-
cause" should be read to mean "solely because of creditor
interests in receiving the money due." But the statute says
nothing about an agency's motives in canceling a license for
failure to pay a dischargeable debt--it simply says govern-
mental units may not cancel licenses "solely because" a
debtor "has not paid" such a debt. See 11 U.S.C. s 525(a)
(emphasis added). It may be true, as the Second Circuit
decided, that the Commission had a regulatory motive for
examining NextWave's timely payment record and canceling
its licenses on that basis, but as we pointed out earlier,
neither the Commission nor Intervenors dispute that
NextWave could have retained its licenses if it had made
timely installment payments. NextWave's failure to make its
payments was thus the "sole" trigger of the license cancella-
tion, in the sense that the Commission looked to no other
factor in determining whether NextWave should retain its
licenses; and we think this is exactly the kind of conduct
barred by section 525's plain text. Adopting Intervenors'
intent-based reading of section 525 would allow governmental
units to escape section 525's limitations simply by invoking a
regulatory motive for their concern with timely payment, and
as we have already explained, section 525 contains no implicit
regulatory purpose exception.

To support their view that the phrase "solely because"
permits license cancellation based on failure to pay a dis-
chargeable debt so long as the cancellation is motivated by a
non-pecuniary regulatory purpose, Intervenors point to legis-
lative history stating that section 525 "does not prohibit
consideration of ... factors[ ] such as future financial respon-
sibility or ability ... if applied nondiscriminatorily," H.R.
Rep. No. 95-595, at 367 (1977), and that "in those cases where
the causes of the bankruptcy are intimately connected with
the license grant ... an examination into the circumstances
surrounding the bankruptcy will permit governmental units to
pursue appropriate regulatory policies and take appropriate
action without running afoul of bankruptcy policy." Id. at
165. But these passages do not lead us to conclude that
section 525 is inapplicable here. To begin with, we may not

"resort to legislative history to cloud a statutory text that is
clear." Ratzlaf v. United States, 510 U.S. 135, 147-48 (1994).
Moreover, while the quoted passages do suggest that agencies
may make regulatory decisions (including perhaps canceling
the licenses of bankrupt debtors) based on factors such as
future financial responsibility or ability, they do not state that
an agency may use timely payment of a dischargeable debt as
the sole indicator of such responsibility, as the Commission
has done here. Cf. H.R. Rep. No. 95-595, at 165 ("The
purpose of [section 525] is to prevent an automatic reaction
against an individual for availing himself of the protection of
the bankruptcy laws.").

Duffey v. Dollison, 734 F.2d 265 (6th Cir. 1984), which
Intervenors invoke, reinforces rather than undermines this
interpretation of section 525. In Duffey, the court upheld as
applied to a bankrupt debtor a state law suspending the
driver's license of anyone who failed to make timely payment
of a state tort judgment until that person provided proof of
future financial responsibility. The statute at issue there
specifically required extrinsic "evidence of financial responsi-
bility," such as a certificate of insurance or a bond, in order to
reinstate a license, and was specifically re-written not to
require payment of discharged debts as a precondition for
reinstatement: "the registrar shall vacate the order of sus-
pension upon proof that such judgment is stayed, or satisfied
in full ... and upon such person's filing ... evidence of
financial responsibility...." Id. at 269 (quoting Ohio Rev.
Code s 4509.45 (Baldwin 1975)). The Commission's automat-
ic cancellation policy, in contrast, refers to no analogous
extrinsic evidence of fitness to hold a license, and allows
license cancellation to rest solely on failure to pay a dis-
chargeable debt.

Finally, noting that section 525 is entitled "Protection
against discriminatory treatment," and that the House Report
on the bankruptcy bill provides that section 525 "extends only
to discrimination or other action based solely ... on the basis
of nonpayment of a debt discharged in the bankruptcy case,"
H.R. Rep. No. 95-595, at 366-67, the Commission suggests
that the provision is inapplicable here because "[a]ll licensees

lost their licenses if they failed to meet the payment dead-
line." Appellee's Br. at 23.

The text of section 525, however, includes "discriminat[ion]"
only as an item in a series of prohibited actions: "a govern-
mental unit may not deny, revoke, suspend, or refuse to
renew a license ... to, [or] condition such a grant to, [or]
discriminate with respect to such a grant against, [or] deny
employment to, [or] terminate the employment of, or discrim-
inate with respect to employment against[ ] a person that is
... a debtor under this title...." 11 U.S.C. s 525(a) (em-
phasis added). Another prohibited action in the series is (as
we have just seen) to "revoke" the license of a bankrupt
"solely because such bankrupt" has "not paid a debt dis-
chargeable" under the Bankruptcy Code--precisely what hap-
pened in this case. And the House Report itself explicitly
states that section 525 "extends only to discrimination or
other action based solely ... on the basis of nonpayment of a
debt discharged in the bankruptcy case...." H.R. Rep. No.
95-595, at 366-67 (emphasis added); see also Walker v. Wilde
(In re Walker), 927 F.2d 1138, 1142-43 (10th Cir. 1991)
(invalidating under section 525 a license cancellation policy
that applied to bankrupts and non-bankrupts alike).

We have no doubt that in developing its installment pay-
ment plan, the Commission made a good faith effort to
implement Congress's command to encourage small busi-
nesses with limited access to capital to participate in PCS
auctions. We are also mindful that, as the Commission
suggests, allowing NextWave to retain its licenses may be
"grossly unfair" to losing bidders and licensees who "complied
with the administrative process and forfeited licenses or made
timely payments despite their financial difficulties." Appel-
lee's Br. at 9. Any unfairness, however, was inherent in the
Commission's decision to employ a licensing scheme that left
its regulatory actions open to attack under Chapter 11 of the
Bankruptcy Code, the very purpose of which is "to permit
successful rehabilitation of debtors." NLRB v. Bildisco &
Bildisco, 465 U.S. 513, 527 (1984); see also H.R. Rep. No.
95-595, at 220 ("The purpose of a business reorganization
case, unlike a liquidation case, is to restructure a business's

finances so that it may continue to operate, provide its
employees with jobs, pay its creditors, and produce a return
for its stockholders."). The Code expressly contemplates that
bankrupts will sometimes avoid the consequences of late or
non-payment they might have faced had they not filed for
bankruptcy. See, e.g., 11 U.S.C. s 1123(a)(5)(G) (stating that
a reorganization plan may, among other options, provide for
"curing or waiving of any default"); United States v. Whiting
Pools, Inc., 462 U.S. 198, 204 (1983) ("The creditor with a
secured interest in property included in the estate must look
to [the provisions of the Bankruptcy Code] for protection,
rather than to the nonbankruptcy remedy of possession.").
And the Code's restrictions have been applied even to the
official actions of Government agencies. See, e.g., Whiting
Pools, 462 U.S. at 209 (enforcing the Bankruptcy Code
against the IRS to prevent seizure of property under a tax
lien and concluding that "[n]othing in the Bankruptcy Code or
its legislative history indicates that Congress intended a
special exception for the tax collector"). Here, as we have
explained, we think section 525 prevents the Commission,
whatever its motive, from canceling the licenses of winning
bidders who fail to make timely installment payments while in
Chapter 11.

We do not think this conclusion frustrates the purposes of
the Communications Act, because nothing in the Act required
the Commission to choose the licensing scheme at issue here.
Although section 309(j) suggests the possibility of using guar-
anteed installment payments of some kind, the statute also
suggests alternative methods of facilitating small business
participation. See 47 U.S.C. s 309(j)(4)(A). Indeed, in 1998,
the Commission decided that "until further notice, installment
payments should not be offered in auctions as a means of
financing small businesses and other designated entities seek-
ing to secure spectrum licenses." See Competitive Bidding
Proceeding, 63 Fed. Reg. 2315, 2318-19 (Jan. 15, 1998).
Moreover, irrespective of the Commission's decision to use
installment payments as part of its licensing scheme, nothing
in the Act required it to enter a creditor relationship with
winning bidders, take liens on licenses, or--most important

for our decision here--make timely payment a license condi-
tion. For example, the Commission could have required
winning bidders to obtain third party guarantees for their
license fee obligations, or required full upfront payment from
C Block licensees and helped them obtain loans from third
parties. The Commission could also have made license
grants conditional on periodic checks of financial health, a
more extensive credit check, or some other evidence that
winning bidders were capable of using their licenses in the
public interest. Having chosen instead a scheme that put it
in a creditor-debtor (and lienholder) relationship with its
licensees and conditioned licenses on timely payment of their
debts, and having as a consequence run afoul of section 525 of
the Bankruptcy Code, the Commission may not escape that
provision's clear command simply because it acted for a
regulatory purpose.

IV

In view of our conclusion that the Commission violated
section 525 of the Bankruptcy Code in canceling NextWave's
licenses, we need not consider NextWave's remaining Bank-
ruptcy Code arguments, nor its arguments that the cancella-
tion violated principles of due process and fair notice. We
therefore reverse and remand to the Commission for proceed-
ings not inconsistent with this opinion.

So ordered.