Mako Communications, LLC v. Federal Communications Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 5, 2016 Decided August 30, 2016
No. 15-1264
MAKO COMMUNICATIONS, LLC,
PETITIONER
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED
STATES OF AMERICA,
RESPONDENTS
FREE ACCESS & BROADCAST TELEMEDIA, LLC,
INTERVENOR
Consolidated with 15-1280
On Petitions for Review of Orders of
the Federal Communications Commission
R. Scott Caulkins argued the cause for petitioners. With
him on the briefs were Aaron P. Shainis, Lee J. Peltzman, and
W. James Mac Naughton.
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,
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Robert J. Wiggers and Kristen C. Limarzi, Attorneys,
Jonathan B. Sallet, General Counsel, Federal
Communications Commission, David M. Gossett, Deputy
General Counsel, and Thaila K. Sundaresan, Counsel. Robert
B. Nicholson, Attorney, U.S. Department of Justice, Richard
K. Welch, Deputy Associate General Counsel, Federal
Communications Commission, and Scott M. Noveck, Counsel,
entered appearances.
Before: GRIFFITH and SRINIVASAN, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
In 2012, Congress enacted the Spectrum Act. The Act
responds to the rapidly growing demand for mobile
broadband services by granting the Federal Communications
Commission authority to reallocate a portion of the licensed
airwaves from television broadcasters to mobile broadband
providers. The Act contemplates the repurposing of licensed
spectrum through a multi-step auction process. Broadcasters
can offer to relinquish existing spectrum rights for a price,
and other parties (including wireless providers) can bid to
purchase the newly available spectrum. The Act also enables
the Commission to make airwaves available by reassigning
broadcasters to a smaller band of spectrum through a process
called “repacking.” This Court has upheld the Commission’s
rules for the auction and repacking process against a
challenge brought by the television broadcast industry. Nat’l
Ass’n of Broad. v. FCC, 789 F.3d 165 (D.C. Cir. 2015).
This case involves a further challenge to the
Commission’s implementation of the Spectrum Act brought
by a particular species of broadcasters—low-power television
(LPTV) stations. LPTV stations often serve areas not reached
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by full-power broadcast stations and can carry niche
programming catered to particular local communities. LPTV
stations have always had secondary status relative to primary
services such as full-power stations, meaning that, if an LPTV
station’s transmissions interfere with a primary service, the
LPTV station must either eliminate the interference or cease
operations.
In implementing the Spectrum Act, the Commission gave
no protection to LPTV stations in connection with the
reallocation of licensed spectrum as part of the auction and
repacking process. The Commission understands the
Spectrum Act to call for such protections only with regard to
primary services, and in the Commission’s view, extending
those protections to LPTV stations would unduly impair the
agency’s ability to make an adequate amount of spectrum
available for mobile broadband providers. The result is that
many LPTV stations may be displaced or forced to shut
down.
In this case, petitioners Mako Communications and
Beach TV, on behalf of LPTV stations, challenge the
Commission’s denial of protections to LPTV stations in the
auction and repacking process. According to petitioners, the
Commission’s actions in that regard violate the Spectrum Act.
We deny the petitions for review and sustain the
Commission’s orders.
I.
The Spectrum Act, enacted as Title VI of the Middle
Class Tax Relief and Job Creation Act of 2012, Pub. L. No.
112-96, 126 Stat. 156, responded to “the changing needs of
American consumers,” in particular, the “growing need for
spectrum” for wireless networks. Nat’l Ass’n of Broad., 789
4
F.3d at 168-69. The Act sets out a three-part process
administered by the Federal Communications Commission to
promote the reallocation of licensed spectrum from broadcast
television to mobile broadband: (i) a reverse auction to
determine the price at which television broadcasters would
sell their spectrum rights; (ii) a repacking process in which the
Commission reassigns television broadcasters who retain their
spectrum rights to a smaller band of spectrum; and (iii) a
forward auction in which other users including mobile
broadband providers can bid for the newly available
spectrum. See id. In 2014, the Commission adopted rules to
implement the auction process. See In the Matter of
Expanding the Economic & Innovation Opportunities of
Spectrum Through Incentive Auctions, 29 FCC Rcd. 6567
(May 15, 2014) (the “Order”).
This case principally involves the repacking process, and,
in particular, the implications of that process for LPTV
stations. The statutory framework governing the repacking
process is set out in 47 U.S.C. § 1452. That provision grants
the Commission general authority to “make such
reassignments of television channels as the Commission
considers appropriate” and to “reallocate such portions of
such spectrum as the Commission determines are available for
reallocation.” 47 U.S.C. § 1452(b)(1). That general grant of
repacking power to the Commission is subject to two
statutory constraints.
First, under subsection (b)(2), the Commission must
“make all reasonable efforts to preserve . . . the coverage area
and population served of each broadcast television licensee.”
Id. § 1452(b)(2). The statute defines a “broadcast television
licensee” fitting within the protections of that provision as a
“full-power television station” or a “low-power television
station that has been accorded primary status as a Class A
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television licensee.” Id. § 1401(6). LPTV stations lacking a
Class A license and thus having secondary (rather than
primary) status—i.e., the general category of LPTV stations—
fall outside the definition of “broadcast television licensee.”
As a result, the Commission determined, “[p]rotection of
LPTV . . . stations in the repacking process is not mandated
by” subsection (b)(2). Order ¶ 238.
Unlike subsection (b)(2), the second statutory constraint
on the Commission’s repacking power expressly pertains to
LPTV stations. That constraint, set out in subsection (b)(5), is
the principal one at issue in this case. It states that “[n]othing
in [Section 1452(b)] shall be construed to alter the spectrum
usage rights of low-power television stations.” 47 U.S.C.
§ 1452(b)(5). The Commission found that subsection (b)(5)
does not compel according special protection to LPTV
stations against displacement as part of the repacking process.
The Commission explained that non-protection of LPTV
stations “does not ‘alter’ their spectrum usage rights” within
the meaning of subsection (b)(5). Order ¶ 239. Because
LPTV “stations have always operated on a secondary basis
with respect to primary licensees,” they “have always
operated in an environment where they could be displaced
from their operating channel by a primary user and, if no new
channel assignment is available, forced to go silent.” Second
Order on Reconsideration, 30 FCC Rcd. 6746, ¶ 68 (June 19,
2015) (the “Reconsideration Order”).
In addition to determining that neither subsection (b)(2)
nor subsection (b)(5) compelled it to protect LPTV stations in
the repacking process, the Commission also declined to
extend protection to LPTV stations as a matter of discretion.
The Commission “recognize[d] the valuable services that
many LPTV . . . stations provide.” Order ¶ 237. But the
Commission did “not believe that extending protection to
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LPTV . . . stations in the repacking process would be
consistent with the goals of the Spectrum Act.” Id. ¶ 241. In
the Commission’s view, “[p]rotecting them would increase
the number of constraints on the repacking process
significantly, and severely limit [its] recovery of spectrum to
carry out the forward auction, thereby frustrating the purposes
of the Spectrum Act.” Id.
The reduction in available spectrum associated with the
reallocation of airwaves to wireless services is anticipated to
have a substantial impact on the LPTV industry. Numerous
LPTV stations thus brought petitions for reconsideration of
the Commission’s rulemaking, including Mako
Communications and Beach TV Properties, the petitioners in
this case. On reconsideration, the Commission affirmed its
intent to exclude LPTV stations from protection in the
repacking process (while also reiterating a commitment to
mitigate the adverse impact on LPTV stations and other
secondary licensees in a separate rulemaking). See
Reconsideration Order ¶¶ 64, 67, 68, 72-76; see also Low
Power Television Digital Rules, Proposed Rule, 81 Fed. Reg.
5086 (Feb. 1, 2016). Petitioners Mako and Beach TV each
filed a petition for review of the Commission’s orders in our
Court. See 47 U.S.C. § 402(a); 28 U.S.C. §§ 2342(1), 2344.
We consolidated their petitions.
Before addressing the merits of the arguments raised by
petitioners, we briefly note a jurisdictional challenge raised by
the Commission. The Commission contends that Mako’s
petition lies beyond our jurisdiction because Mako failed to
challenge the Commission’s Order (instead naming only the
Commission’s Reconsideration Order) in its original filings
with this court. Although we generally lack jurisdiction over
a petition challenging only an agency’s denial of
reconsideration, see Sinclair Broad. Grp., Inc. v. FCC, 284
7
F.3d 148, 156 (D.C. Cir. 2002), we undisputedly have
jurisdiction over Beach TV’s petition. Because Beach TV
raises the same arguments as Mako, we can address the merits
of the petitions based on our authority over Beach TV’s
petition alone, regardless of whether we would have
jurisdiction over Mako’s petition. See Sec’y of the Interior v.
California, 464 U.S. 312, 319 n.3 (1984); accord Rumsfeld v.
Forum for Acad. & Institutional Rights, Inc., 547 U.S. 47, 52
n.2 (2006); Ams. for Safe Access v. DEA, 706 F.3d 438, 443
(D.C. Cir. 2013); Comcast Corp. v. FCC, 579 F.3d 1, 6 (D.C.
Cir. 2009). We therefore proceed to the merits.
II.
Petitioners argue that the Commission’s implementation
of the repacking process—in particular, the Commission’s
refusal to protect LPTV stations in that process—contravenes
subsection (b)(5)’s prohibition against “alter[ing] the
spectrum usage rights of low-power television stations.” 47
U.S.C. § 1452(b)(5). We sustain the Commission’s
understanding and implementation of that provision.
We review the Commission’s interpretation of the statute
under the two-step Chevron framework. See Nat’l Ass’n of
Broad., 789 F.3d at 171 (citing Northpoint Tech., Ltd. v. FCC,
412 F.3d 145, 151 (D.C. Cir. 2005)). First, we consider
whether Congress “has directly spoken to the precise question
at issue,” in which case we “give effect to the unambiguously
expressed intent of Congress.” Chevron U.S.A., Inc. v. Nat.
Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). If “the
statute is silent or ambiguous with respect to the specific
issue,” we then decide if the agency’s interpretation is “a
permissible construction of the statute.” Id. at 843. “A
‘reasonable’ explanation of how an agency’s interpretation
serves the statute’s objectives is the stuff of which a
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‘permissible’ construction is made.” Northpoint Tech., Ltd. v.
FCC, 412 F.3d 145, 151 (D.C. Cir. 2005) (citing Chevron,
467 U.S. at 863).
The pertinent statutory language bars the Commission
from implementing its statutory repacking authority in a
manner that would “alter the spectrum usage rights of low-
power television stations.” 47 U.S.C. § 1452(b)(5).
According to petitioners, that provision unambiguously
compels the conclusion at Chevron step one that LPTV
stations must be protected against displacement in the
repacking process. Petitioners’ reading of the statute is
incorrect.
In order to assess whether the repacking process
envisioned by the Commission’s orders could “alter” LPTV
stations’ “spectrum usage rights,” we must initially identify
the nature of those spectrum usage rights in the first place
(before any purported alteration). Since their inception as a
category in 1982, LPTV stations have been accorded
secondary status. That status means that LPTV stations have
always been subject to displacement by primary services such
as full-power broadcast stations. LPTV stations cannot cause
interference to (and must accept interference from) primary
services. See Order ¶ 239. LPTV stations’ “secondary
status” therefore has always “pose[d] the possibility that they
might be required to alter facilities or cease operation at any
time.” An Inquiry Into the Future Role of Low Power
Television Broadcasting & Television Translators in the
National Telecommunications System, 47 Fed. Reg. 21468,
21489 ¶ 95 (May 18, 1982).
Petitioners do not dispute that LPTV stations have had a
secondary status relative to—and thus have been subject to
displacement by—primary services such as full-power
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television licensees. According to petitioners, however,
LPTV stations did not have secondary status vis-à-vis
wireless service providers before the Spectrum Act. As a
result, petitioners contend, allowing for the displacement of
LPTV stations’ spectrum in favor of wireless providers would
run afoul of subsection (b)(5)’s prohibition against conducting
the repacking process in a manner that would “alter” LPTV
stations’ spectrum usage rights.
We need not address whether petitioners are correct in
assuming that subsection (b)(5) would stand in the way of the
Commission’s adding new services to the category of primary
services to which LPTV stations are subordinate in priority.
Even assuming subsection (b)(5) essentially froze in place the
roster of primary services in effect at the time of the Spectrum
Act’s enactment, LPTV stations had been subject to
displacement by wireless licensees long before the Spectrum
Act. See Order ¶ 239 n.741. LPTV stations’ subordination to
wireless services had been made explicit by at least 2004,
when the Commission reallocated a different portion of the
spectrum from primary broadcast providers to wireless
providers. In its Digital LPTV Order promulgated that year,
the Commission adopted procedures under which an LPTV
station could be notified of its displacement by a “primary”
wireless service provider. See In the Matter of Amendment of
Parts 73 & 74 of the Commission’s Rules to Establish Rules
for Digital Low Power Television, Television Translator, &
Television Booster Stations & to Amend Rules for Digital
Class A Stations, 19 FCC Rcd. 19,331, ¶¶ 72-73 (2004); 47
C.F.R. § 74.703.
Petitioners claim, however, that the Commission’s orders
under the Spectrum Act materially differ from the
Commission’s Digital LPTV Order, under which LPTV
stations could remain on vacated channels as secondary
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licensees. Under the challenged orders, petitioners contend,
LPTV stations instead are removed completely from the
reallocated spectrum. Petitioners’ understanding is incorrect.
As was the case under the Digital LPTV Order, LPTV
stations can still remain on cleared spectrum until a wireless
provider actually displaces them. See, e.g., Order ¶¶ 668-671.
Thus, contrary to petitioners’ claims, the challenged orders
subordinate LPTV stations to wireless licensees in the same
way the Commission had done before the Spectrum Act. We
therefore reject petitioners’ contention that the terms of
subsection (b)(5) unambiguously compel protecting LPTV
stations from displacement in the repacking process called for
by the Act.
Proceeding to Chevron step two, we ask whether the
Commission offered a “‘reasonable’ explanation of how [its]
interpretation serves the [Act]’s objectives.” Northpoint
Tech., Ltd., 412 F.3d at 151 (citing Chevron, 467 U.S. at 863).
The challenged orders meet that standard. There are
approximately 1,900 licensed LPTV stations. The
Commission reasonably declined to protect LPTV stations
from displacement in the repacking process because doing so
would “severely limit . . . recovery of spectrum to carry out
the forward auction, thereby frustrating the purposes of the
Spectrum Act.” Order ¶ 241. In National Ass’n of
Broadcasters, we rejected the argument that the Commission
was required to protect one type of low-power station (known
as a “fill-in translator” because it fills gaps in the geographic
coverage of a full-power station). See Nat’l Ass’n of Broad.,
789 F.3d at 179. We explained that the Commission
permissibly declined to protect fill-in translator stations so as
to avoid significantly impairing the agency’s flexibility in the
repacking process. Id. at 180. That is essentially the same
explanation given by the Commission in the orders under
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review in this case, and we see no reason for any different
result here.
Petitioners argue that the Commission’s understanding of
subsection (b)(5) nonetheless is unreasonable because it
renders the provision entirely meaningless. Petitioners are
mistaken. As a general matter, LPTV stations’ secondary
status renders them subject to displacement insofar as they
cause interference to primary services. See Order ¶¶ 239-240
& n.745. Subsection (b)(5)’s prohibition against conducting
the repacking process in a manner that would “alter” LPTV
stations’ spectrum usage rights therefore has the effect of
making clear that, as was the case before the Spectrum Act,
the Commission’s repacking authority does not enable it to
displace LPTV stations even if they cause no interference to
primary services. For that reason, the Commission’s
understanding of subsection (b)(5) does not leave the
provision without any effect. We therefore conclude that the
Commission’s treatment of LPTV stations in the challenged
orders rests on a reasonable understanding of subsection
(b)(5) for purposes of Chevron step two, and we reject
petitioners’ arbitrary-and-capricious arguments to the same
effect. See Nat’l Ass’n of Broad., 789 F.3d at 176 (citing
Gen. Instrument Corp. v. FCC, 213 F.3d 724, 732 (D.C. Cir.
2000)).
We finally (and briefly) take up, and reject, a distinct
procedural challenge raised by petitioners. According to
petitioners, the Commission’s orders are inconsistent with
Section 312 of the Communications Act, 47 U.S.C. § 312,
which grants certain procedural protections set forth in
Section 9(b) of the Administrative Procedure Act, 5 U.S.C.
§ 558(c), to a licensee whose license is “revoke[d].” Both the
Communications Act and the APA describe the revocation of
a license as an intentional sanction against the license holder,
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see, e.g., 47 U.S.C. § 312; 5 U.S.C. § 558, a description that
does not—or at least does not have to—apply to the
displacement of an LPTV station in the repacking process.
As the Commission explained, “[d]isplacement does not
‘revoke’ LPTV . . . licenses for purposes of section 312 of the
Act because it does not require termination of operations or
relinquishment of spectrum usage rights; displacement
requires only that LPTV . . . stations vacate the channel on
which they are operating.” Reconsideration Order ¶ 69.
Indeed, LPTV stations “may be displaced by primary services
at any time,” id., not just during the repacking process, and
Section 312 normally has no bearing on such displacements,
see, e.g., 47 C.F.R. § 74.703. Petitioners give no basis for
treating the potential displacement of LPTV stations in the
repacking process any differently.
* * * * *
For the foregoing reasons, we deny the petitions for
review.
So ordered.