Before the
                FEDERAL COMMUNICATIONS COMMISSION
                     Washington, D.C.  20554

In the Matter of

Communications between Applicants in
Commission Spectrum Auctions

WT Docket No. 97-82

     Comments of the Office of Advocacy, U.S. Small Business
                         Administration
                                
     The Office of Advocacy of the United States Small Business

Administration respectfully submits these Comments in the above-

captioned proceeding,(1) in which the Federal Communications

Commission proposes to amend its anti-collusion rules to require

applicants to report communications an applicant makes or

receives regarding any applicant's bid or bidding strategy.(2)

Advocacy filed previous comments in this proceeding because the

Commission certified that the amended rule would have no

significant impact on small business, without providing the

factual basis for this conclusion.(3) In response to Advocacy's

comments, the Commission published an initial regulatory

flexibility analysis, but this analysis does not satisfy the

requirements of the Regulatory Flexibility Act (RFA).(4)

     First, the Commission fails to describe the impact its rules

would have on small business.  The Commission outlines the types

of entities that the rule change would affect, but does not

describe the rule's impact, as RFA requires.(5) As Advocacy

points out in its original comments, the Commission's proposal

would expand the obligations that applicants must meet when they

participate in an auction.  The amended collusion rule would

impose reporting requirements on applicants and would cover a

broader range of communications.  The new rule also would

increase the risk of punitive action, which could include

monetary forfeitures.  But small businesses generally have far

fewer financial resources than their larger counterparts do, and

thus have less ability to absorb the costs of forfeitures.  The

Commission's proposed expansion of the collusion rule increases

the risk of punishment.  The Commission does not discuss this

potential burden, as it should.

     Second, the Commission does not propose any alternatives

designed to minimize the impact of the rule on small business,

consistent with the agency's goals in this proceeding, as RFA

requires.(6) Instead, the Commission summarizes its proposal and

concludes that it will have no significant impact on small

business.

     Unfortunately, the Commission consistently treats RFA as if

it imposes a procedural checklist, which the agency runs through,

but only after rulemaking proposals have been drafted. RFA's goal

is to alter how the agency formulates proposals and reaches

policy conclusions.  Under RFA, policymakers must consider the

impact of their ideas on small business as they develop rules, so

that the rules reflect or respond to this impact.  RFA does not

permit policymakers to complete proposals and hand over the

resulting notice of proposed rulemaking to other parties to

conduct an "analysis" that the law obligates the Commission

itself to do.  The FCC must change the way it formulates policy,

so that it considers small business interests from the outset of

each rulemaking proceeding.



Conclusion

     To reiterate, the Commission's initial certification was

fatally flawed.  The subsequent regulatory flexibility analysis

also is fatally flawed.  The FCC is inexplicably developing a

very impressive record of flaunting RFA.  It is not clear what it

will take for the Commission to begin to take its legal

responsibilities seriously.  The noncompliance of the FCC will be

highlighted in Advocacy's next report to Congress.



Respectfully submitted,




Jere W. Glover
Chief Counsel for Advocacy




R. Bradley Koerner
Assistant Chief Counsel for Telecommunications


August 29, 2000

ENDNOTES

1.  Communications between Applicants in Commission Spectrum
Auctions, Notice of Proposed Rulemaking, WT Docket No. 97-82, FCC
99-384, 65 Fed. Reg. 154 (August 9, 2000) (to amend 47 C.F.R.
1.2105(c)(1)).
2.  See 47 C.F.R.   1.2105(c)(1).
3.  See 5 U.S.C.  605(b).
4.  Pub. L. No. 96-354, 94 Stat. 1164 (codified at 5 U.S.C.  601
et seq.).
5.  See 5 U.S.C.  603(a).  In fact, the Commission maintains
that the rule change would not have a significant impact on small
business.  This conclusion raises the obvious question, why was
the Commission unable to provide the requisite factual basis to
support its earlier conclusion that the rule would not have a
significant impact on a substantial number of small businesses.
6.  See 5 U.S.C.  603(c).