Commty TV Inc v. FCC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 27, 2000 Decided July 7, 2000

No. 98-1106

Community Television, Inc., et al.,

Appellant/Petitioners

v.

Federal Communications Commission,

Appellee/Respondent

Paxson Communications Corporation, et al.,

Intervenors

Association for Maximum Service Television, Inc., et al.,

Intervenor

Consolidated with

Nos. 98-1212, 98-1259, 99-1082

Appeals and Petitions for Review of Orders of the

Federal Communications Commission

---------

John Griffith Johnson, Jr. argued the cause for petitioners.

With him on the briefs were Gene A. Bechtel, Christopher D.

Imlay, Stephen T. Yelverton, Arthur H. Harding, R. Bruce

Beckner, Jill Kleppe McClelland, and Daniel R. Ball. Rich-

ard F. Swift entered an appearance.

Scott D. Dailard argued the cause for intervenors Paxson

Communications Corporation, et al. With him on the briefs

were John R. Feore, Jr., Barry A. Friedman and David M.

Silverman.

C. Grey Pash, Jr., Counsel, Federal Communications Com-

mission, argued the cause for appellee. With him on the brief

were Christopher J. Wright, General Counsel, Daniel M.

Armstrong, Associate General Counsel, Joel Marcus and K.

Michele Walters, Counsel, Joel I. Klein, Assistant Attorney

General, U.S. Department of Justice, Robert B. Nicholson

and Adam D. Hirsh, Attorneys. Catherine G. O'Sullivan, and

Christopher J. Sprigman, Attorneys, U.S. Department of

Justice, entered appearances.

Jonathan D. Blake was on the brief for intervenor Associa-

tion for Maximum Service Television, Inc.

Before: Edwards, Chief Judge, Henderson and Rogers,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Petitioners and intervenors1 seek

review of the Federal Communications Commission's final

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1 Petitioners in these consolidated cases are Community Televi-

sion, Inc., Pappas Telecasting of Southern California, LLC, Penn-

sylvania Telecasters Association, and Minority Television Project,

Inc. Intervenors in support of petitioners are Paxson Communica-

tions Corporation, Corridor Television, LLP, and Entravision Com-

munications Company, LLC. For ease of reference we refer to

these parties as "petitioners" except as indicated. Certain other

broadcasters withdrew their petitions or the court dismissed their

challenges, see, e.g., Lindsay Television, Inc. v. Association of

America's Pub. Television Stations, 1998 WL 633809 (D.C. Cir.

Aug. 11, 1998), including Mountain Broadcasting Corporation, which

voluntarily withdrew its petition for review after filing its opening

rules establishing the procedures and timetable under which

television broadcasting will migrate from the now-prevalent

analog technology to digital technology. Digital technology

holds the promise of either greatly enhancing the audiovisual

quality of television broadcasts or of replicating current quali-

ty while liberating substantial portions of the broadcast spec-

trum for other uses. Because of the massive investment

required by broadcasters and consumers, who must purchase

digital televisions or converter devices, to accomplish the

analog-to-digital transition, the rules under review provide for

a ten-year transition period during which licensed broadcast-

ers and those with permits to construct broadcast facilities as

of August 3, 1997, have received an additional channel to

commence digital broadcasting while continuing analog broad-

casts during the transition. At the end of the transition

period, analog transmissions will cease; broadcasters will

retain their new digital channels and give back to the FCC

their analog channels. Thus by statute, essentially all televi-

sion broadcasting in the United States will be exclusively by

digital technology as of December 31, 2006. See 47 U.S.C.

s 309(j)(14)(A)-(B).

To plan for the transition, the FCC indisputably faced

myriad policy choices and a daunting engineering task. Giv-

en the complexity and interdependence of the decisions the

FCC had to make, the trade-offs among competing interests

would be unlikely to satisfy all broadcasters and consumers.

Remarkably then, only a few broadcasters, four petitioners

supported by three intervenors, challenge the final rules now.

They contend that the FCC acted unlawfully by: (1) granting

a second channel to broadcasters whose construction permit

applications had been approved by April 3, 1997, while deny-

ing a second channel to those whose applications had not been

so approved; (2) allotting that second channel to replicate the

area served as of April 3, 1997, even if the broadcaster had

__________

brief in light of the FCC's decision to allow it to trade DTV

channels with another station. See Public Notice, Broadcast Ac-

tions, Report No. 44600, 1999 WL 979570 (Oct. 27, 1999). Separate-

ly, the Association for Maximum Service Television, Inc. intervened

in support of the FCC.

applied to expand the service area as of that date; (3)

adopting and applying its "service replication" principle in a

way that unfairly favored VHF broadcasters over UHF

broadcasters; and (4) deleting Channel 29 in State College,

Pennsylvania and redistributing that spectrum where a

would-be broadcaster had sought to apply to operate Channel

29. While petitioners' challenges may be sympathetic, we

conclude that the FCC's decisions were neither arbitrary,

capricious, nor contrary to law, and accordingly, we deny the

petitions for review.

I.

From its inception, the television broadcasting industry has

relied on a common set of technical standards to maximize the

availability of television. When the FCC made its first

allotment of spectrum for broadcast television in 1941, it also

adopted the basic engineering standards devised by the Na-

tional Television System Committee for monochromatic

(black-and-white) television service.2 See Notice of Inquiry,

In the Matter of Advanced Television Systems and Their

Impact on the Existing Television Broadcast Service, 2

F.C.C.R. 5125, 5126 (1987). That standard, commonly re-

ferred to as NTSC, was revised in 1953 to allow for color

television broadcasting, and again in 1984 to allow for broad-

casts using stereophonic sound. Id. Relying on the NTSC

standard, the FCC maintains the Television Table of Allot-

ments, 47 C.F.R. s 73.606, which is the master plan for

allocating NTSC television broadcast channels to communities

throughout the country. See WITN-TV v. FCC, 849 F.2d

1521, 1522-23 (D.C. Cir. 1988). The Table of Allotments

designates how many full service, low power, and television

translator channels are assigned to each community, see 47

C.F.R. ss 73.601, 73.606, and these designations distinguish

__________

2 These standards include the width of the television broadcast

channel, the precise frequencies for the visual and aural carriers,

the number of lines per frame, the scanning rate and method, the

aspect ratio or width-to-height ratio of the picture, and the audio

mode.

between VHF ("very high frequency") Channels 2-13 and

UHF ("ultra high frequency") Channels 14-69.

Although the NTSC standard proved to be workable for

more than fifty years, in light of the development of new

broadcasting technologies, the emergence of competing stan-

dards, and the growing popularity of cable television, mem-

bers of the television broadcasting industry petitioned for a

rulemaking in 1987 for the adoption of a new and improved

standard for provision of "advanced" television, or "ATV".3

The FCC obliged. See Notice of Inquiry, 2 F.C.C.R. 5125.

The development of the rules under review illustrates the

difficult policy issues and complex engineering challenges

faced by the FCC. At the outset of the rulemaking proceed-

ing, the FCC ordered a freeze on any amendments to the

Television Table of Allotments and on all applications for

construction permits for vacant television channels in the

thirty busiest television markets in order to preserve its

options for reallocating spectrum should that become neces-

sary. See Advanced Television Systems, 776 Rad. Reg.2d

(P&F) 843 (1987) ("Freeze Order"). By 1991, the FCC tenta-

tively opined, and ultimately decided that: migration to a new

standard would be in the public interest; the transition to a

digital standard would not involve rededication of broadcast

spectrum; incumbent broadcasters would be the parties best

suited to implement the transition to a digital standard; a

transition period during which NTSC broadcasts would con-

tinue would be necessary; and the width of a digital channel

would not exceed the NTSC-standard width of 6 MHz. No-

tice of Proposed Rulemaking, 6 F.C.C.R. at 7024 ("NPRM").

To carry out these policies, the FCC proposed to pair DTV

channels with analog licenses, providing incumbent broadcast-

ers with a second 6 MHz channel for digital broadcasts (a

"DTV channel") without charge for use during the transition

period to allow for both digital and NTSC broadcasts. Id. at

__________

3 The FCC adopted the term "ATV" to describe a variety of

competing technologies, each of which would improve upon NTSC

service. See Notice of Proposed Rulemaking, 6 F.C.C.R. 7024, 7024

n.1 (1991).

7025-26. In the period between the initial NPRM in 1991

and 1996, following a series of reports and orders and further

notices of proposed rulemaking, the FCC's transition plan

had been substantially developed.

Then, in 1996, Congress enacted the Telecommunications

Act of 1996, Pub. L. No. 101-104, 110 Stat. 56 (1996) ("1996

Act"), preempting to a limited degree some FCC decisions

related to the analog-to-digital transition. Thereafter the

relevant decisions by the FCC occurred as follows: On July

25, 1996, the FCC adopted its Sixth Further Notice of

Proposed Rulemaking, 11 F.C.C.R. 10968 (1996), in which it

set forth the proposed DTV Table of Allotments showing

which broadcasters would receive which DTV channels.4

Then, on April 3, 1997, the FCC adopted two reports and

orders that are directly at issue. In the Fifth Report and

Order, 12 F.C.C.R. 12809 (1997), the FCC issued initial DTV

licenses to incumbent broadcasters and set forth the timeta-

ble and terms under which the transition to DTV would take

place. In the Sixth Report and Order, 12 F.C.C.R. 14588

(1997), the FCC promulgated the final DTV Table and set

forth its rationale for the decisions reflected therein. In

response to petitions for reconsideration, the FCC reaffirmed,

clarified, and, in some measure, revised its decisions in two

rounds. See Memorandum Opinion and Order on Reconsid-

eration of the Fifth Report and Order ("Service Reconsidera-

tion"), 13 F.C.C.R. 6860 (1998); Memorandum Opinion and

Order on Reconsideration of the Sixth Report and Order

("Allotment Reconsideration"), 13 F.C.C.R. 7418 (1998); Sec-

ond Memorandum Opinion and Order on Reconsideration of

the Fifth and Sixth Report and Orders ("SMOOR"), 14

F.C.C.R. 1348 (1998).

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4 On December 27, 1996, the FCC released its Fourth Report

and Order, 11 F.C.C.R. 17771 (1996), which adopted a technical

DTV standard. Petitioners do not challenge the decisions reflected

therein.

In Part II of this opinion we address whether the FCC was

statutorily barred from issuing DTV licenses in the Fifth

Report and Order, and if not, whether the FCC arbitrarily

failed to grant a second DTV channel to Pappas Telecasting

of Southern California, Entravision Communications Compa-

ny, Corridor Television, and Paxson Communications Corpo-

ration. In Part III we address whether the FCC arbitrarily

decided not to upgrade the service area covered by the DTV

allotments for Community Television, Inc. and Paxson Com-

munications Corporation. In Part IV we address whether the

FCC arbitrarily deviated from its service-replication policy

when assigning Minority Television Project, Inc.'s digital

allotment. And, in Part V we address whether the FCC

abused its discretion in eliminating Channel 29 and reassign-

ing its spectrum when the Pennsylvania Telecasters Associa-

tion sought to apply for a construction permit for the channel

and its petition to waive the Freeze Order was pending.

II.

Pappas Telecasting of Southern California, Corridor Televi-

sion, Paxson Communications Corporation, and Entravision

Communications Company (collectively "the pending appli-

cants") contend that the FCC unlawfully deprived them of a

second channel for digital broadcasting during the transition

period. The FCC's licensing scheme for NTSC channels has

two stages. See Service Reconsideration, 13 F.C.C.R. at 6862

& n.7. A potential broadcaster first applies for a permit to

construct a television station, and, if the permit is granted,

the permittee then applies for a broadcast license. Id. The

FCC proposed to provide a DTV channel to all parties that

held a broadcast license, a construction permit, or had applied

for a construction permit as of the October 24, 1991, adoption

of the NPRM. See Second Report/Further Notice, 7

F.C.C.R. 3340, 3342-44 (1992). In the event of a "spectrum

shortfall" in some communities, licensees and permittees

would receive preference. Id.; see also Third Report/

Further Notice, 7 F.C.C.R. 6924, 6928 (1992). Pappas and

Corridor had both applied for construction permits by Octo-

ber 24, 1991, and were thus, at the time, in the pool of

broadcasters eligible for a second channel.

However, during the rulemaking, Congress passed the 1996

Act, which addressed the issue of eligibility for additional

television broadcast spectrum in the following terms:

If the Commission determines to issue additional licenses

for advanced television services, the Commission--(1)

should limit the initial eligibility for such licenses to

persons that, as of the date of such issuance, are licensed

to operate a television broadcast station or hold a permit

to construct such a station (or both); and (2) shall adopt

regulations that allow the holders of such licenses to

offer such ancillary or supplementary services on desig-

nated frequencies as may be consistent with the public

interest, convenience, and necessity.

47 U.S.C. s 336(a).

In the Fifth Report and Order, the FCC announced that,

pursuant to s 336(a)(1), it had limited initial eligibility for a

DTV channel to existing licensees and permittees as of April

3, 1997. 12 F.C.C.R. at 12814-15. The Fifth Report and

Order also "modified" the licenses or permits of eligible

broadcasters to grant them an "additional" license for use of a

DTV channel, subject to the conditions set forth therein. Id.

at 12838. The FCC embodied its grant of these DTV licenses

in its final DTV Table of Allotments. See Sixth Report and

Order, 12 F.C.C.R. at 14693, app. B. Recognizing that the

final allocation excluded some broadcasters who had been

considered eligible for a DTV channel prior to the 1996 Act,

the FCC stated that it would "give particular consideration

for assigning temporary DTV channels to new licensees who

applied on or before October 24, 1991, given the reliance that

these parties may have placed on rules we adopted before

passage of the 1996 Act." Fifth Report and Order, 12

F.C.C.R. at 12816a n.26.

In its second opinion on reconsideration of the Fifth and

Sixth Reports (SMOOR), the FCC denied requests for paired

channels by those permittees and licensees whose applications

had been pending as of October 24, 1991, but were not

granted until after April 3, 1997. While noting its stated

intent in the Fifth Report and Order to give "particular

consideration" to such applicants, the FCC pointed out that it

had also notified them of their low priority should there be

insufficient spectrum available for DTV channels. SMOOR,

14 F.C.C.R. at 1358-60 & n.36. The FCC also noted that, in

reconsidering the Fifth Report (Service Reconsideration), it

had granted such applicants authority either to construct

DTV stations on their NTSC channels immediately, or to

convert to DTV service later, and had streamlined the appli-

cation process for such analog-to-digital modification. Id. at

1359-60 (citing Service Reconsideration, 13 F.C.C.R. at 6864-

66).

A. s 308(a)'s Written-Application Requirement. Hav-

ing been deprived of "initial eligibility" for a DTV allotment

by the 1996 Act, the pending applicants first raise a statutory

challenge that, if successful, would invalidate the FCC's en-

tire DTV licensing scheme. In the Fifth Report and Order,

the FCC set forth a three-stage process by which it first

determined that all existing broadcasters and permittees as of

April 3, 1997, were granted a digital license to broadcast on

an additional channel. 12 F.C.C.R. at 12838-40.5 The FCC

then established a procedure by which licensees and permit-

tees would apply to construct facilities for digital transmission

and then apply to test and use those facilities. Id. at 12840-

48. Although the FCC stated in the Fifth Report and Order

that it was "issu[ing]" DTV licenses, it at the same time

clarified that the licenses "issued" in fact were modifications

of existing analog television permits or licenses. Id. at 12838.

The pending applicants contend that the FCC's "issuance"

of these DTV licenses contravened s 308(a), which provides in

part that the FCC "may grant construction permits and

station licenses, or modifications or renewals thereof, only

__________

5 The three stages are (1) the initial modified license for DTV,

(2) certification or application for a construction permit, and (3)

application for a license to cover a construction permit for a DTV

facility. Id.

upon written application therefor received by it," subject to

exceptions in times of emergency. 47 U.S.C. s 308(a). They

maintain that the Communications Act required each incum-

bent broadcaster to file a written application for an initial

DTV license with the FCC. The second and third stages of

the process outlined in the Fifth Report and Order each

require a written application. In the pending applicants'

view, the FCC did not comply with s 308(a) until it issued

DTV licenses pursuant to the third stage of the process set

forth in the Fifth Report and Order. Thus, they continue,

the first such license was issued on February 5, 1999, and

that date should be used for determining "initial eligibility"

under s 336(a)(1). Using this calculus, the pending appli-

cants deem themselves initially eligible for a DTV channel

because all of their respective NTSC construction permits

had been granted prior to February 1999.

As an initial matter, the FCC contends that this challenge

was not raised below and thus is not subject to review.

Although it appears that no petitioner directed the FCC's

attention specifically to s 308(a) during the rulemaking, com-

ments by another party to that proceeding provided the FCC

with a sufficient opportunity to consider the issue such that

judicial review is proper. See 47 U.S.C. s 405(a). Specifical-

ly, the pending applicants rely on the comments of the Media

Access Project ("MAP"), that because DTV licenses would be

new licenses, the FCC was statutorily required by 47 U.S.C.

s 308(b) to determine that each broadcaster receiving such a

license was financially qualified. MAP's comments logically

implicated s 308(a)'s written application requirement because

they were directed to the contents of such applications.

On the merits, the court reviews the FCC's interpretation

of the Communications Act under the now-familiar standard

set forth in Chevron U.S.A. Inc. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837, 842-843 (1984), by which the

court considers "whether Congress has directly spoken to the

precise question at issue," id. at 842, and if it has not,

"whether the agency's answer is based on a permissible

construction of the statute." Id. at 843. We do not agree

that the plain language of s 308(a) compels the crimped

reading advocated by the pending applicants. Because the

recipients of the initial DTV licenses were broadcasters with

written applications already on file, s 308(a) must be read in

conjunction with 47 U.S.C. s 316, which allows the FCC to

modify existing licenses,6 and new s 336, added by the 1996

Act, which directed the FCC to limit initial eligibility for DTV

licenses to incumbent broadcasters (or those holding con-

struction permits for a television broadcast facility). Because

Congress did not answer the question of how these provisions

apply to the issuance of DTV licenses, we will uphold the

FCC's harmonization of the relevant provisions so long as it is

reasonable.

In concluding that the FCC's interpretation of its modifica-

tion authority was reasonable, we are instructed by the

court's previous reconciliation of the apparent conflict be-

tween s 308(a) and s 316(a)(1), in holding that "[t]he Com-

mission has power under Section 316(a) ... to modify a

license without an application for the modification having

been made by the licensee." Peoples Broadcasting Co. v.

United States, 209 F.2d 286, 287 (D.C. Cir. 1953). While in

Peoples Broadcasting, the court affirmed the FCC's power to

modify a broadcaster's license by requiring it to shift from

Channel 4 to Channel 8, nothing in the statute or that opinion

suggests that the FCC's modification power is limited to

individual licenses. Rather, the FCC may modify entire

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6 Section 316(a)(1) provides:

Any station license or construction permit may be modified by

the Commission either for a limited time or for the duration of

the term thereof, if in the judgment of the Commission such

action will promote the public interest, convenience, and neces-

sity, or the provisions of this chapter or of any treaty ratified

by the United States will be more fully complied with. No

such order of modification shall become final until the holder of

the license or permit shall have been notified in writing of the

proposed action and the grounds and reasons therefor, and

shall be given reasonable opportunity, of at least thirty days, to

protest such proposed order of modification; except that,

where safety of life or property is involved, the Commission

may by order provide, for a shorter period of notice.

classes of licenses. Further, the issuance of transitory DTV

licenses in the Fifth Report and Order was part of a process

that modifies broadcasters' underlying permits and licenses in

a way analogous to the modification upheld in Peoples Broad-

casting: at the end of the transition period, broadcasters will

have migrated from one channel to another. While there

admittedly is a difference in kind from the circumstances in

People's Broadcasting, the analog-to-digital transition is limit-

ed to a one-time change.

Hence, what the FCC did in the Fifth Report and Order is

unlike the situation in MCI Telecommunications Corp. v.

AT&T, 512 U.S. 218 (1994), on which the pending applicants

rely. There the Supreme Court held that the FCC's power

to "modify" the requirements of 47 U.S.C. s 203, under which

telecommunications carriers file their rates in a tariff with the

FCC, did not authorize the FCC to do away with tariffs

altogether, and that no deference was due to an interpreta-

tion that went beyond the meaning that the statute could

bear. Id. at 229.7 While the pending applicants contend that

the same reasoning applies here because the FCC's issuance

of an initial DTV license cannot reasonably be said to modify

a broadcaster's existing license, the FCC has not wrought a

fundamental change to the terms of those permits and licens-

es. Broadcasters will begin and end the transition period

broadcasting television programming to the public under very

similar terms. Although the FCC chose not to require 100%

simulcasting on the NTSC and DTV channels throughout the

transition, and Congress disfavored such an approach, see 47

U.S.C. s 336(a)(2), broadcasters will provide essentially the

same services, with some flexibility to provide ancillary ser-

vices as well, under their licenses during the transition. See

Service Reconsideration, 13 F.C.C.R. at 6873-74. Because

the issuance of initial DTV licenses to existing broadcasters

was not clearly the issuance of new "station licenses" under

s 308(a) and because the terms of the DTV licenses can

reasonably be considered modifications of existing licenses,

__________

7 Subsequently, Congress authorized detariffing. See MCI

Worldcom Inc. v. FCC, 209 F.3d 760 (D.C. Cir. 2000).

the FCC could reasonably deem s 308(a) inapplicable and

issue DTV licenses pursuant to s 316.

Finally, the FCC reasonably construed s 336 to allow for

the three-stage process set forth in the Fifth Report and

Order. In the 1996 Act, Congress preempted the ongoing

DTV proceeding only to a limited degree. Section 336 over-

ruled the FCC's decision to include applicants for construc-

tion permits in the pool of broadcasters eligible for a second

channel during the transition period. In most other respects,

Congress left the details of managing the analog-to-digital

transition to the FCC. Nothing in s 336 foreclosed the FCC

from issuing initial DTV licenses on a date certain. More-

over, because Congress limited initial eligibility for DTV

licenses to incumbent broadcasters, the FCC could reason-

ably construe s 336(a)(1)'s reference to "additional licenses

for advanced television services" to encompass a modification

of existing licenses and permits to allow for advanced televi-

sion services in addition to then-existing analog broadcasting

services. Having adopted a paired channel approach, giving

a DTV license to the eligible broadcasters, the FCC's inter-

pretation of its modification power reasonably followed. For

as the FCC explained at oral argument, the two reasons for

requiring the filing of an application for a new license--to

determine who is eligible and how to award licenses in a

competitive proceeding--are inapplicable here: Congress has

defined who is eligible and there is to be no competition.

For these reasons we conclude that in the Fifth Report and

Order the FCC reasonably construed the Communications

Act to allow it to modify existing broadcast licenses and

construction permits to render incumbent broadcasters ini-

tially eligible to provide DTV services consistent with

s 336(a) and pursuant to s 316(a)(1) without having received

written applications for "station licenses" covered by s 308(a).

B. The April 3, 1997, Cut-Off for DTV Eligibility. In

the alternative, the pending applicants contend that even if

the FCC had authority to issue initial DTV licenses in the

Fifth Report and Order without having received written

applications, the FCC unreasonably interpreted s 336 as

requiring it to issue DTV licenses to those eligible under

s 336(a)(1) as of a single date rather than account for those

with equities on their side, such as Pappas Telecasting of

Southern California and Corridor Television who had been

eligible for a second channel prior to the 1996 Act. Further,

they contend that the FCC failed to adequately explain why it

chose not to grant them a second channel.

Our review is limited to whether the FCC acted reasonably

and adequately explained its decision not to grant the pending

applicants a second channel for the transition period. It

clearly did. The FCC left no mystery as to its rationale.

Notwithstanding the pending applicants' equitable arguments

arising out of their disappointment resulting from the 1996

Act, the FCC decided that the spectrum that they sought

would be put to better use by providing it to new full power

broadcasters as well as new and displaced low power televi-

sion (LPTV) and TV translator stations. See SMOOR, 14

F.C.C.R. at 1359-60. The pending applicants have not

shown, in light of s 336, that the date-certain approach was

"patently unreasonable, having no relationship to the underly-

ing regulatory problem." Home Box Office, Inc. v. FCC, 567

F.2d 9, 60 (D.C. Cir. 1977); see also Cassell v. FCC, 154 F.3d

478, 485 (D.C. Cir. 1998). Moreover, the FCC adequately

addressed the equitable concerns of those applicants who

were granted construction permits after April 3, 1997, by

allowing them to convert to DTV on the channel they are

granted and to apply to maximize their service area. See

Service Reconsideration, 13 F.C.C.R. at 6863-66.8 As to the

substance of the FCC's rationale, it is hardly arbitrary and

capricious. The agency reasonably balanced competing de-

mands for spectrum and allowed the pending applicants con-

siderable flexibility in making the transition to DTV.9

__________

8 The FCC's reference in the Fifth Report and Order to

"particular consideration" for those in the pending applicants' posi-

tion did not guarantee any particular result, and certainly did not

obligate the FCC to take steps beyond the careful balancing of

interests reflected in its decision to deny paired channels while

increasing flexibility for analog-to-digital conversions for those in

the pending applicants' position.

III.

Community Television, Inc. ("Community") and Paxson

Communications Corporation ("Paxson"), each received a sec-

ond channel but contend that their allotment was inadequate

because it does not serve the upgraded service area for which

each had applied. As a matter of policy, the FCC decided

that it would allot DTV channels in a manner to replicate a

broadcaster's existing NTSC service area. See Sixth Further

Notice, 11 F.C.C.R. at 10974-75. In the Sixth Further

Notice, the FCC indicated that "we are proposing to allow

stations to maximize or increase their service area where such

an increase would not create additional interference," id. at

10975; however, the FCC cautioned that allowing such modi-

fications would affect the DTV Table, causing both technical

difficulties and affecting the ability of broadcasters to com-

ment meaningfully on the draft DTV Table. Id. at 10993.

To balance broadcasters' individual interests in increasing

their service areas against the broader interests in establish-

ing a workable DTV Table, the FCC announced in the Sixth

Further Notice that it would "henceforth condition the grant

of applications for modifications of technical facilities, includ-

ing those for applications on file before the date of the

adoption of this Further Notice but granted after that date,

__________

9 Pappas contends further that the FCC arbitrarily failed to

consider its unique circumstances in that it had applied for a

construction permit prior to October 24, 1991 and had presented the

FCC with a motion for leave to supplement its reconsideration

petition to show that a DTV channel was available in its community

of Avalon, California. The FCC did not grant Pappas' motion for

leave and was therefore not obliged to consider its supplement. See

47 C.F.R. s 1.429(d). To the extent that the FCC was obliged to

articulate its reasons for not granting leave, its failure to do so was

harmless. See 5 U.S.C. s 706. In rejecting a very similar conten-

tion raised by another party, the FCC made clear that the availabil-

ity of another channel was immaterial to its discretionary decision

not to award a DTV channel to petitioners. See SMOOR 14

F.C.C.R. at 1358-59.

on the outcome of our final decision on the DTV Table of

Allotments." Id. Commenters complained that those broad-

casters who had applied to upgrade their service prior to July

25, 1996, the date of issuance of the Sixth Further Notice, did

so with the expectation that they would receive corresponding

digital upgrades and that it would be economically infeasible

to invest in an upgrade of analog service only for the transi-

tion period.

The FCC partially accommodated such broadcasters. The

final DTV Table, issued in the Sixth Report and Order,

reflected NTSC upgrades that had been granted in the

interim between the Sixth Further Notice and the Sixth

Report and Order, that is, between July 25, 1996 and April 3,

1997. Applications that had not been acted upon as of April

3, 1997, remained subject to the condition of non-interference

with the DTV Table, and, if granted, would not include a

corresponding digital upgrade. See SMOOR, 14 F.C.C.R. at

1362-63. Community is licensed to operate Channel 57 in

Atlanta, Georgia and had applied to upgrade its NTSC ser-

vice area prior to the adoption of the Sixth Further Notice on

July 25, 1996. Because the FCC did not grant Community's

application until May 1999, Community's DTV channel, Chan-

nel 41, does not replicate its upgraded NTSC service area.

Similarly, Paxson had filed eleven upgrade applications prior

to July 25, 1996, each of which was granted after April 3,

1997, and therefore did not include a corresponding digital

upgrade. Each party may, however, apply for such a digital

upgrade. See 47 C.F.R. s 73.622, 73.623.

Community and Paxson first contend that the FCC's ac-

tions were impermissibly retroactive by subjecting pending

upgrade applications to the compatibility principle. However,

the mere filing of upgrade applications did not vest petition-

ers with a legally cognizable expectation interest. See

Chadmoore Comm., Inc. v. FCC, 113 F.3d 235, 240-41 (D.C.

Cir. 1997). Thus the FCC was free to alter its criteria for

considering those applications. Next, Community and Pax-

son contend, in essence, that the FCC did not try hard

enough to accommodate pending applications during the

course of assembling the DTV Table of Allotments. Neither

party has demonstrated that the FCC's failure to fashion the

DTV Table in a manner that would have granted all upgrade

applications pending on July 25, 1996, was a product of

administrative whim or sloth. On the contrary, the FCC

found that it was not feasible to grant all of the NTSC

modification applications. SMOOR, 14 F.C.C.R. at 1362.

Paxson contends, however, that it is unable to demonstrate

that the FCC acted arbitrarily because the FCC failed to

explain why some upgrade applications were granted while

others were not. It continues, the FCC cannot reasonably

defend its decision to treat those broadcasters whose upgrade

applications were granted after April 3, 1997, differently than

those whose applications were granted before that date with-

out explaining how it decided which applications to grant on

which dates. But the FCC explained that it granted those

applications that were consistent with the DTV Table and

deferred action on those that were not. We presume that the

FCC processed the pending applications with administrative

regularity, for neither Community nor Paxson has identified

any evidence that rebuts that presumption. See, e.g., Louisi-

ana Ass'n of Indep. Producers and Royalty Owners v. FERC,

958 F.2d 1101, 1119 (D.C. Cir. 1992); see also Wilson v.

Hodel, 758 F.2d 1369, 1372-73 (10th Cir. 1985). Further-

more, while both Paxson and Community assert that some

later-filed applications were granted prior to some earlier-

filed applications, there is no indication that administrative

irregularities occurred. Paxson's real complaint is that the

FCC fashioned the DTV Table in such a way that its upgrade

applications were processed more slowly than others. How-

ever, Paxson has not demonstrated why this processing, or

the compromises made in the DTV Table, were arbitrary.

IV.

Minority Television Project ("MTP"), licensee of Channel

32 in San Francisco, California, contends that the FCC's

"service replication" policy unlawfully puts it at a competitive

disadvantage because the policy unnecessarily entrenches the

disparity between VHF and UHF channels. Most analog

UHF stations have smaller service areas than analog VHF

stations, for historical and technical reasons. See Electronic

Indus. Ass'n Consumer Elec. Group v. FCC, 636 F.2d 689,

691-92 (D.C. Cir. 1980). UHF stations are more susceptible

to interference. See id. at 698 n.17. Digital technology

mitigates interference problems on the UHF band. See Sixth

Report and Order, 12 F.C.C.R. at 14603-04. Nonetheless,

under either an analog or digital transmission system, broad-

casting on UHF channels to reach a given audience requires

higher power than broadcasting on VHF channels. The FCC

set power parameters of 50 kW to 1000kW for digital UHF

channels. Id. at 14605. This meant that some UHF channels

would see their service area increased by the minimum power

requirement while other broadcasters, who had an analog

VHF channel but received a digital UHF channel, would see

their service area decreased because of the ceiling on power

that could be used for digital broadcasting on the UHF band.

MTP's analog and digital channels are both in the UHF band.

MTP's contention that the FCC's service-replication policy

arbitrarily entrenches the historical VHF/UHF disparity is in

essence a dispute about a policy decision properly within the

province of the FCC. Initially the FCC had adopted an

approach that would have maximized the service area of each

DTV allotment, an approach favored by MTP, and the FCC

sought comment on this allocation policy. See Sixth Further

Notice, 11 F.C.C.R. at 10974-75. However, the FCC ulti-

mately sided with the numerous broadcasters that preferred

to replicate the status quo to the greatest extent possible.

See Sixth Report and Order, 12 F.C.C.R. at 14605-07. While

MTP is disappointed by the FCC's choice of its service-

replication policy, MTP fails to demonstrate how that choice

was unlawful.

In the alternative, MTP contends that the overall DTV

allotment for San Francisco, and the allotment MTP received

at the minimum UHF power level of 50 kW, are arbitrary

because MTP's DTV channel will not reach the audience

currently served. MTP does not seriously dispute that its

DTV signal will propagate along the same contours as does

its NTSC signal. Rather MTP maintains that its DTV allot-

ment lacks sufficient power to penetrate physical obstacles,

such as buildings and hills, and therefore its DTV channel will

not reach viewers who currently receive its NTSC service.

MTP is further concerned that neighboring allotments will

not allow it to increase its power if necessary. However,

MTP presents no data to demonstrate that the power level of

its allotment is so inadequate as to amount to an arbitrary

departure from the service-replication policy.10

V.

Finally, Pennsylvania Telecasters Association ("PTA") chal-

lenges the FCC's decision to reallocate the spectrum that had

been set aside for Channel 29 in State College, Pennsylvania

without first considering PTA's application to broadcast on

Channel 29. Channel 29 was one of many vacant NTSC

allotments that were deleted in the course of compiling the

DTV Table.

To implement its policy to reconfigure spectrum allotments

to enable broadcasters using one channel to use two, the FCC

needed to identify more than 1900 channels available for

assignment to incumbent broadcasters. See Sixth Further

Notice, 11 F.C.C.R. at 10972. The FCC had issued its Freeze

Order in 1987, recognizing that any transition plan would

require considerable spectrum. Among the vacant channels

covered by the Freeze Order was Channel 29. The FCC had

assigned the channel to State College in 1972 and it had

remained vacant until imposition of the Freeze Order in 1987.

In 1996, the FCC issued its proposed DTV Table in the Sixth

Further Notice and announced that to facilitate finalization of

the DTV Table, it would stop accepting applications for new

NTSC stations as of September 20, 1996. See Sixth Further

__________

10 Moreover, should subsequent events bear out MTP's con-

cerns, the FCC states in its brief on appeal that it retains authority

to make adjustments to mitigate interference problems that may

arise during the analog-to-digital transition. The FCC points out

that it has already demonstrated such flexibility in allowing Moun-

tain Broadcasting Corporation to trade DTV channels with another

station. See supra note 1.

Notice, 11 F.C.C.R. at 10993. The FCC noted further that

"[t]he DTV Table proposed herein was developed on the

assumption that the existing vacant NTSC allotments for

which no construction permit application is pending will be

deleted." Id.

On September 20, 1996, PTA and another would-be broad-

caster petitioned the FCC to waive the application of the

Freeze Order to Channel 29 and to accept their applications

for a construction permit for that channel. When the FCC

issued its final DTV Table in the Sixth Report and Order, the

FCC had reassigned the spectrum allotted for Channel 29 in

State College to DTV channels serving Johnstown, Pennsyl-

vania and Williamsport, Pennsylvania. PTA petitioned for

reconsideration, arguing that the elimination of Channel 29

was contrary to the FCC's commitment to "maintain and

protect those vacant NTSC allotments that are the subject of

pending applications." See Sixth Report and Order, 12

F.C.C.R. at 14639. The FCC denied reconsideration on the

ground that PTA's "application has not been accepted, and we

have not acted on its waiver request. The allotment at issue

was needed and was used for DTV." Allotment Reconsidera-

tion, 13 F.C.C.R. at 7601-02.

PTA's petition for review must be denied because it mis-

construes the FCC's policy. PTA filed its waiver petition and

application for Channel 29 in response to that portion of the

Sixth Further Notice in which the FCC stated that it would

stop accepting applications for vacant analog channels in 30

days and that "we will continue our current policy of consid-

ering requests for waiver of our 1987 freeze Order on a case-

by-case basis." 11 F.C.C.R. at 10992. PTA misread this

statement as a promise to consider new applications for

unused channels in freeze areas. To the contrary, the FCC

promised only that it would consider requests to lift the

freeze on a case-by-case basis, not that it would consider

unused channel applications prior to lifting the freeze. In-

deed, the FCC indicated that applications requiring a lifting

of the freeze would not be accepted for filing unless there was

a public notice to that effect. Id. The FCC ultimately

explained that neither PTA's waiver request nor the applica-

tion had been accepted pursuant to the Freeze Order, and

that elimination of Channel 29 and reallocation of its spec-

trum were necessary to accommodate the DTV Table. Allot-

ment Reconsideration, 13 F.C.C.R. at 7601-02.

The FCC reasonably interpreted its commitment in the

Sixth Report and Order to maintain and protect vacant

NTSC allotments for which applications were pending, 12

F.C.C.R. at 14639, to be limited to applications for vacant

allotments not subject to the Freeze Order or for which a

waiver of the Freeze Order had been granted. Because under

the terms of the Sixth Report and Order PTA's waiver

petition did not constrain the FCC's authority to eliminate

Channel 29, the FCC acted consistently with its stated expec-

tation that "the existing vacant NTSC allotments for which no

construction permit application is pending will be deleted."

Sixth Further Notice, 11 F.C.C.R. at 10993.11

* * * * *

We conclude as we began. The FCC faced a host of

difficult decisions in designing rules for the transition from

analog to digital television broadcasting. After years of work,

a small number of the parties to the proceeding have sought

relief in the court from unfavorable FCC interpretations and

decisions. Even if the compromises reflected in the chal-

lenged FCC decisions were not always Solomonic in their

wisdom, they were not required to be. Given the relevant

statutory directives and regulations, and the competing inter-

ests of the various broadcasters and viewers concerning use

of limited spectrum, the FCC reasonably and permissibly

interpreted its obligations in allocating the valuable public

__________

11 For this reason, PTA's contention based on the Due Process

Clause, U.S. Const. amend V, is without merit; the FCC did not

deprive PTA of a property or liberty interest by deleting Channel

29. Similarly, the FCC did not violate 47 U.S.C. s 307(b), which

directs the FCC to ensure equitable distribution of radio service

among communities, because that section applies to the FCC's

consideration of "applications for licenses," which PTA's waiver

petition was not.

resource that is broadcast spectrum. Accordingly, we deny

the petitions for review.