Nat'l Ass'n of Broadcasters v. Fed. Commc'ns Comm'n

• Decision Date: 12 June 2015
• Docket Number: 14–1179,Nos. 14–1154,14–1218.,s. 14–1154
• Citation: 789 F.3d 165
• Parties: NATIONAL ASSOCIATION OF BROADCASTERS, Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents CTIA—The Wireless Association, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

789 F.3d 165

NATIONAL ASSOCIATION OF BROADCASTERS, Petitioner

v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, RespondentsCTIA—The Wireless Association, et al., Intervenors.

Nos. 14–1154

14–1179

14–1218.

United States Court of Appeals, District of Columbia Circuit.

Argued March 12, 2015.

Decided June 12, 2015.

Miguel A. Estrada argued the cause for petitioner National Association of Broadcasters.John K. Hane argued the cause for petitioner Sinclair Broadcast Group, Inc. With them on the joint briefs were Lucas C. Townsend, Ashley S. Boizelle, Rick Kaplan, Jerianne Timmerman, Jeetander T. Dulani, and Cynthia Cook Robertson. Clifford M. Harrington, Thomas G. Allen, and Jane E. Mago entered appearances.

Jacob M. Lewis, Associate General Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were William J. Baer, Assistant Attorney General, U.S. Department of Justice, Robert J. Wiggers and Kristen C. Limarzi, Attorneys, Jonathan B. Sallet, General Counsel, Federal Communications Commission, David M. Gossett, Deputy General Counsel, and C. Grey Pash Jr., Counsel. Richard K. Welch, Deputy Associate General Counsel, Federal Communications Commission, entered an appearance.

Dominic F. Perella argued the cause for intervenors CTIA—The Wireless Association, et al. in support of respondents. With him on the brief were Michael K. Kellogg, Scott H. Angstreich, Catherine E. Stetson, Elizabeth Austin Bonner, Michael Altschul, Rebecca M. Thompson, and Julie M. Kearney.

Preston R. Padden and Daniel M. Armstrong were on the brief for intervenor Expanding Opportunities for Broadcasters Coalition in support of respondents.

Before: HENDERSON and SRINIVASAN, Circuit Judges, and SENTELLE, Senior Circuit Judge.

Opinion

Opinion for the Court filed by Circuit Judge SRINIVASAN.

SRINIVASAN, Circuit Judge:

This case arises out of the Federal Communications Commission's rulemaking under Title VI of the Middle Class Tax Relief and Job Creation Act of 2012, Pub.L. No. 112–96, 126 Stat. 156, known as the Spectrum Act. In recognition of the changing needs of American consumers, the Spectrum Act authorizes the FCC to shift a portion of the licensed airwaves from over-the-air television broadcasters to mobile broadband providers. The Act directs the Commission to carry out the objective of repurposing spectrum through three interdependent initiatives: (i) a reverse auction to determine the prices at which broadcasters would voluntarily sell their spectrum rights; (ii) a reassignment of broadcasters who wish to retain their rights to new channels in a smaller band of spectrum; and (iii) a forward auction to sell the blocks of newly available spectrum to wireless providers, with the proceeds used to compensate broadcasters who voluntarily relinquished their spectrum rights and to pay the relocation expenses of broadcasters reassigned to new channels.

After the FCC adopted rules setting forth its framework for the incentive auction and channel-reassignment process, members of the television broadcast industry filed petitions for review of the Commission's orders in this court. Petitioners argue that certain Commission decisions announced in the orders conflict with the Spectrum Act or are otherwise arbitrary and capricious. We deny the petitions for review and sustain the Commission's orders.

I.

Nearly two-thirds of American adults now own a smartphone. Aaron Smith et al., Pew Research Ctr., U.S. Smartphone Use in 2015, at 2 (2015), available at http://www.pewinternet.org/files/2015/03/PI_Smartphones_0401151.pdf. For that and related reasons, the use of wireless networks in the United States is “skyrocketing, dramatically increasing demands on both licensed and unlicensed spectrum—the invisible infrastructure on which all wireless networks depend.” In the Matter of Expanding the Economic & Innovation Opportunities of Spectrum Through Incentive Auctions, 27 FCC Rcd. 12,357, ¶ 1 (2012) (NPRM ). The FCC warns that the country “faces a major challenge to ensure that the speed, capacity, and accessibility of our wireless networks keeps pace with these demands in the years ahead.” Id.

Broadcast television currently occupies an important portion of radiofrequency spectrum. Resp'ts' Br. 5; see NPRM, ¶ 12 & n. 12. Approximately 8,400 broadcast television stations provide service in the very-high frequency (VHF) and ultra-high frequency (UHF) bands, with each station allotted a channel covering a particular geographic area. Resp'ts' Br. 5. Broadcast television stations supply free over-the-air programming “that is often highly responsive to the needs and interests of the communities they serve,” including local news, educational programming, and emergency information. NPRM, ¶ 13.

“Although broadcast television continues to be a vital source of local news and information for most Americans, the other offerings in the video programming marketplace have diverted much of broadcast television's over-the-air viewing audience over the years.” Id. ¶ 14. At one time, “virtually all” television households received programming through an over-the-air signal. Id. During the 2011–2012 television season, however, only about 10 percent of television households relied solely on broadcast television for programming. Id.

In 2009, the broadcast television industry completed a congressionally mandated transition from analog to digital transmission (“the DTV transition”). Id. ¶ 15. Currently, however, “[n]ot all broadcasters are in a position to take advantage of the opportunities created by the digital transition,” and the Commission anticipates that a significant number of broadcasters will struggle financially and eventually exit the business. Id. ¶ 16.

In light of the state of the broadcast television industry, and in response to the nation's growing need for spectrum, Congress, in the Spectrum Act, authorized the FCC to hold an incentive auction to encourage broadcasters to relinquish their spectrum rights in exchange for incentive payments. Middle Class Tax Relief and Job Creation Act, Title VI; see NPRM, ¶ 3. For broadcasters who decline to give up their spectrum rights in the reverse auction, the Act authorizes the FCC to undertake a “repacking” process under which it will reassign those broadcasters to new channels in a different (and smaller) band of spectrum. See NPRM, ¶ 7. Those measures will enable the Commission to recover a portion of the UHF spectrum, see id. ¶ 5, which possesses propagation and penetration characteristics “especially well-suited for mobile broadband use,” Resp'ts' Br. 5. The agency will then conduct a forward auction to offer the recovered spectrum to wireless carriers. See NPRM, ¶ 5.

Those three initiatives—the reverse auction, the repacking process, and the forward auction—work together. Id. As the FCC explains in its brief, the “reverse auction depends on forward auction bidders' willingness to pay and the forward auction depends on reverse auction bidders' willingness to relinquish spectrum rights in exchange for payments, and each of these depend on an efficient repacking of the spectrum used by the broadcasters that remain to clear a portion of the UHF band for new uses.” Resp'ts' Br. 9.

In October 2012, the Commission issued a Notice of Proposed Rulemaking to implement the measures authorized by the Spectrum Act. NPRM, 27 FCC Rcd. 12,357. On June 2, 2014, after receiving extensive comments on its proposals, the Commission issued a 329–page Report and Order. In the Matter of Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, 29 FCC Rcd. 6567 (2014) (Order ). The Order adopted rules for the reverse and forward auctions. The Commission also explained its planned implementation of the repacking process, including how it intended to fulfill the Spectrum Act's requirement to undertake “all reasonable efforts” to preserve “the coverage area and population served” of broadcasters reassigned to new channels. 47 U.S.C. § 1452(b)(2). The Commission stated that it would aim to assure that each repacked station “serves essentially the same viewers that it served before the incentive auction.” Order, ¶ 7. Two commissioners issued statements dissenting from various aspects of the Commission's Order. Id. at 7038 (dissenting statement of Commissioner Pai); id. at 7048 (dissenting statement of Commissioner O'Rielly).

In August and September 2014, respectively, the National Association of Broadcasters (NAB) and Sinclair Broadcast Group, Inc. each filed a petition for review of the Commission's Order with our court. See 47 U.S.C. § 402(a) ; 28 U.S.C. §§ 2342(1), 2344. We consolidated the petitions and set an expedited briefing schedule pursuant to petitioners' request. On September 30, 2014, the Commission issued a Declaratory Ruling to “clarify” how it “intend [ed] to preserve the ‘coverage area’ as well as the ‘population served’ of eligible broadcasters in the repacking process,” in an effort to “remove any uncertainty” about its planned approach. In the Matter of Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, 29 FCC Rcd. 12,240, ¶ 1 (2014) (Declaratory Ruling ). NAB filed a petition for review of the Declaratory Ruling, which we consolidated with NAB's and Sinclair's original petitions.

II.

Petitioners press a series of arguments challenging the Commission's implementation of the Spectrum Act's mandate to expend “all reasonable efforts” to preserve “the coverage area and population served” of broadcasters reassigned to new channels in the repacking process. 47 U.S.C. § 1452(b)(2). We reject petitioners' arguments.

A.

Petitioners' principal challenge concerns the Commission's approach for determining the geographic area and customer base served by each broadcast licensee. The Spectrum Act grants the Commission authority to “make such reassignments of television channels as the Commission considers appropriate” when reallocating...