Agape Church, Inc. v. Fed. Commc'ns Comm'n

• Decision Date: 27 December 2013
• Docket Number: No. 12–1334.,12–1334.
• Parties: AGAPE CHURCH, INC., et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

738 F.3d 397

AGAPE CHURCH, INC., et al., Petitioners

v.FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.

No. 12–1334.

United States Court of Appeals,District of Columbia Circuit.

Argued Sept. 27, 2013.

Decided Dec. 27, 2013.

On Petition for Review of an Order of the Federal Communications Commission.

William S. Consovoy argued the cause for Petitioners. On the briefs were Helgi C. Walker, Kathleen A. Kirby, Eve Klindera Reed, and Christiane M. McKnight. Jane E. Mago and Jerianne Timmerman entered appearances.

Andrew Jay Schwartzman argued the cause and filed the brief for intervenor National Hispanic Media Coalition.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were William J. Baer, Assistant Attorney General, and Robert B. Nicholson and Kristen C. Limarzi, Attorneys, U.S. Department of Justice; Sean A. Lev, General Counsel, Peter Karanjia, Deputy General Counsel, and Jacob M. Lewis, Associate General Counsel, Federal Communications Commission. Richard K. Welch, Deputy Associate General Counsel, and Laurence N. Bourne, Counsel, Federal Communications Commission, entered appearances.

Matthew A. Brill argued the cause for intervenors National Cable & Telecommunications Association and Time Warner Cable, Incorporated. With him on the brief were Richard P. Bress, Amanda E. Potter, Katherine I. Twomey, Rick C. Chessen, Michael S. Schooler, and Diane B. Burstein.

Before: KAVANAUGH, Circuit Judge, and EDWARDS and WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

Concurring opinion filed by Circuit Judge KAVANAUGH.

EDWARDS, Senior Circuit Judge:

In the Cable Television Consumer Protection and Competition Act of 1992 (the “Cable Act”), Congress enacted provisions requiring cable television systems to dedicate some of their channels to local broadcast stations, creating so-called “must-carry” rights for stations electing such mandatory carriage. See47 U.S.C. §§ 534–35. Section 614(b)(7), the principal statutory provision at issue in this case, states that must-carry broadcast signals “shall be viewable via cable on all television receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable operator provides a connection.” 47 U.S.C. § 534(b)(7).

In 2007, with the growing prominence of digital broadcasting, the Federal Communications Commission (“FCC” or “Commission”) promulgated a rule requiring “hybrid” cable companies— i.e., those that provide both analog and digital cable service—to “downconvert” from digital to analog broadcast signals from must-carry stations for subscribers with analog television sets. Carriage of Digital Television Broadcast Signals, Third Report and Order, 22 FCC Rcd. 21,064 (2007) (“Viewability Rule”). This downconversion requirement ensured that digital broadcast programs from protected must-carry stations would be converted by the cable companies from digital to analog signals before transmission to customers. In other words, cable subscribers with analog television sets would be able to view the digital programs from must-carry broadcast stations without the need of special equipment. By its terms, the Viewability Rule was scheduled to expire in 2012, unless extended by the Commission.

In 2012, following notice and comment rulemaking, the FCC allowed the downconversion requirement to expire. In place of the Viewability Rule, the Commission promulgated a new rule that allows cable operators to provide conversion equipment to analog customers, either “for free or at an affordable cost that does not substantially deter use of the equipment.” Carriage of Digital Television Broadcast Signals, Fifth Report and Order, 27 FCC Rcd. 6529, 6534 (2012) (“Sunset Order”). Petitioners, a group of must-carry broadcasters, now seek review of the Sunset Order. Petitioners claim that the FCC's new rule cannot be squared with Congress's mandate that must-carry broadcast signals “ shall be viewable via cable on all television receivers of a subscriber which are connected to a cable system.” 47 U.S.C. § 534(b)(7) (emphasis added).

Petitioners have advanced four claims in support of their petition for review.

• First, Petitioners contend that the Commission's new rule violates the plain terms of the statute and, thus, cannot survive review under Chevron Step One. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 n. 9, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (“The judiciary ... must reject administrative constructions which are contrary to clear congressional intent. If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.” (citations omitted)).

• Second, Petitioners essentially assert that the new rule is manifestly contrary to the statute and, therefore, cannot survive scrutiny under Chevron Step Two. Id. at 843–44 .

• Third, Petitioners claim that the FCC's new rule is not supported by reasoned decisionmaking and, therefore, is arbitrary and capricious. Motor Vehicle Mfrs. Ass'n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 [103 S.Ct. 2856, 77 L.Ed.2d 443] (1983) (“Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”).

• Finally, Petitioners argue that the FCC's notice and comment rulemaking procedures were fatally flawed because the agency's Sunset Rule was not a logical outgrowth of the agency's notice of proposed rulemaking. CSX Transp., Inc. v. Surface Transp. Bd., 584 F.3d 1076, 1080 (D.C.Cir.2009) (“[A] final rule fails the logical outgrowth test and thus violates the APA's notice requirement where interested parties would have had to divine the agency's unspoken thoughts, because the final rule was surprisingly distant from the proposed rule.” (quotation and citation omitted)).

Petitioners' claims lack merit. The FCC's 2007 Viewability Rule was not mandated by the statute. Rather, the rule was promulgated by the Commission as a stopgap measure to preserve access to must-carry broadcast programs for the significant number of cable customers with analog television sets. Since 2007, however, the telecommunications market—including the technology in use by broadcasters, cable distributors, and customers—has changed dramatically. The congressionally mandated transition from analog to digital broadcasting is complete, nearly all new televisions on the market are digital-ready, and many cable companies have abandoned analog service altogether in favor of all-digital operations. And, most critically, in 2012 there were significantly more home conversion devices in use (27 million) to display digital channels on analog sets than there were customers actually subscribing to analog cable service with downconversion (12.6 million). Petitioners do not dispute that these trends are expected to continue. Rather, Petitioners take the position that the Cable Act requires the FCC to maintain the regulatory scheme embodied in the Viewability Rule so long as there are hybrid cable companies providing service to subscribers who use analog television sets. Petitioners' argument effectively freezes time in the face of shifting technology and finds no support in the law.

The FCC's new rule allowing cable operators to offer analog subscribers equipment in lieu of downconversion was within its authority under the statute, supported by reasoned decisionmaking, and properly promulgated pursuant to notice and comment rulemaking procedures in which interested parties should have anticipated that the change was possible. We therefore deny the petition for review.

I. Background

The history of the Cable Act is recounted in detail in Turner Broadcasting System, Inc. v. FCC (Turner II), 520 U.S. 180, 117 S.Ct. 1174, 137 L.Ed.2d 369 (1997), and Turner Broadcasting System, Inc. v. FCC (Turner I), 512 U.S. 622, 114 S.Ct. 2445, 129 L.Ed.2d 497 (1994). As the Court noted in Turner II:

[The] must-carry [requirement in the Cable Act] was designed to serve three interrelated interests: (1) preserving the benefits of free, over-the-air local broadcast television, (2) promoting the widespread dissemination of information from a multiplicity of sources, and (3) promoting fair competition in the market for television programming.... [E]ach of those is an important governmental interest. We have been most explicit in holding that protecting noncable households from loss of regular television broadcasting service due to competition from cable systems is an important federal interest. Forty percent of American households continue to rely on over-the-air signals for television programming. Despite the growing importance of cable television and alternative technologies, broadcasting is demonstrably a principal source of information and entertainment for a great part of the Nation's population. We have identified a corresponding governmental purpose of the highest order in ensuring public access to a multiplicity of information sources. And it is undisputed the Government has an interest in eliminating restraints on fair competition, even when the individuals or entities subject to particular regulations are engaged in expressive activity protected by the First Amendment.

520 U.S. at 189–90, 117 S.Ct. 1174 (citations and quotations omitted).

Likewise, the events leading to the Viewability Rule, and its content and purposes, are fully explored in C–SPAN v. FCC, 545 F.3d 1051, 1052–54 (D.C.Cir.2008). The court noted that the Viewability...