EchoStar Satel v. FCC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 12, 2005 Decided July 25, 2006

No. 04-1304

ECHOSTAR SATELLITE L.L.C.,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS

NATIONAL ASSOCIATION OF BROADCASTERS, ET AL.,

INTERVENORS

On Petition for Review of Orders of the

Federal Communications Commission

Pantelis Michalopoulos argued the cause for petitioner.

With him on the briefs were Rhonda M. Bolton and John D.

Clopper.

Joel Marcus, Counsel, Federal Communications

Commission, argued the cause for respondents. With him on the

brief were Thomas O. Barnett, Acting Assistant Attorney

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

Robert J. Wiggers, Attorneys, Samuel L. Feder, General

Counsel, Federal Communications Commission, and Daniel M.

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Armstrong, Associate General Counsel. John A. Rogovin,

Attorney, entered an appearance.

Thomas P. Olson argued the cause and filed the brief for

intervenors National Association of Broadcasters, et al.

Before: GINSBURG, Chief Judge, and SENTELLE, Circuit

Judge, and WILLIAMS, Senior Circuit Judge.

GINSBURG, Chief Judge: EchoStar Satellite L.L.C., a

provider of direct-to-the-home satellite television service,

petitions for review of two orders in which the Federal

Communications Commission adopted an improved version of

its Individual Location Longley-Rice (ILLR) model for

predicting the strength of broadcast television signals. In

response to congressional directives in § 1008 of the Satellite

Home Viewer Improvement Act of 1999 both to adopt a

“reliabl[e]” model and to “ensure” that the model “takes into

account” loss of signal strength due to “terrain, building

structures, and other land cover variations,” 47 U.S.C. §

339(c)(3), the Commission altered its ILLR model for UHF

stations but, as a practical matter, did not do so for VHF

stations. EchoStar argues, among other things, the decision with

respect to VHF stations violated § 339(c)(3). Six associations

of broadcasters and the Fox Broadcasting Company have

intervened in support of the Commission. For the reasons stated

below, we deny EchoStar’s petitions in all respects.

I. Background

A network television broadcaster generally has “exclusive

rights,” pursuant to the Copyright Act, 17 U.S.C. § 106(5), to

authorize the public display of its copyrighted content, including

the retransmission of its broadcast signal. In the Satellite Home

Viewer Act of 1998 (SHVA), the Congress, in order to make

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network programming available to households outside the

broadcast range of a local network affiliate, gave satellite

carriers a “statutory license,” that is, a compulsory license

subject to payment of a prescribed royalty, to retransmit to

“unserved households” the signals of no more than two distant

network television stations. 17 U.S.C. §§ 119(a)(2)(A)-(B). An

unserved household is, with respect to a particular television

network, one that is unable to receive by way of a conventional

rooftop antenna a Grade B signal, as defined by the

Commission, from one of that network’s affiliates. Id. §

119(d)(10)(A).

In the wake of the SHVA, the Commission adopted the

ILLR computer model “to predict whether a household is likely

to be able to receive a signal of the required strength” and

thereby “minimiz[e] the need for on-site testing.” See Satellite

Delivery of Network Signals to Unserved Households for

Purposes of the Satellite Home Viewer Act, Report & Order, 14

F.C.C. Rcd. 2654, ¶ 7 (1999) (SHVA Order). When it was

adopted, EchoStar and others criticized the ILLR model because

it did not account for loss of signal strength due to variations in

land cover -- for example, buildings and vegetation -- also

known as “clutter loss.” See id. ¶ 82. The Commission

acknowledged that land cover affects signal intensity, but

declined to include a clutter loss factor in the model because it

was “not aware of a standard means of including such

information in the ILLR that has been accepted by the technical

and scientific community.” Id. ¶ 83.

In response, the Congress enacted the Satellite Home

Viewer Improvement Act of 1999 (SHVIA), directing the

Commission to “take all actions necessary ... to develop and

prescribe by rule a point-to-point predictive model for reliably

and presumptively determining the ability of individual

locations to receive signals [of Grade B intensity].” 47 U.S.C.

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§ 339(c)(3). Specifically, the Commission was to “rely on the

[ILLR] model set forth [in its SHVA Order] and ensure that such

model takes into account terrain, building structures, and other

land cover variations.” Id. The Congress further directed the

Commission to establish “procedures for the continued

refinement in the application of the model by the use of

additional data as it [sic] becomes available.” Id. Finally, the

SHVIA amended the Copyright Act to incorporate a statutory

presumption in favor of the Commission’s ILLR model. See 17

U.S.C. § 119(a)(2)(B)(ii)(I) (in copyright dispute between

broadcaster and satellite carrier, court must rely upon ILLR

model, as revised by the Commission over time, to establish

presumptively whether satellite subscriber is “unserved”).

Pursuant to the SHVIA, the Commission conducted the

rulemaking here under review, proposing to adjust the ILLR

model to incorporate “the effects of both vegetation and

buildings.” See Establishment of an Improved Model for

Predicting the Broad. Television Field Strength Received at

Individual Locations, Notice of Proposed Rulemaking, 15

F.C.C. Rcd. 1843, ¶ 9 (2000) (ILLR Notice). In particular, the

Commission proposed to subtract from each predicted signal

strength a “clutter loss value” based upon one of ten different

categories of land cover, using data from the Land Use and Land

Cover (LULC) database published by the United States

Geological Survey. Id. ¶¶ 9-11. Loss of signal strength would

be calculated using the figures in “Clutter Losses and

Environmental Noise Characteristics Associated with Various

LULC Categories,” IEEE Transactions on Broadcasting, Vol.

44, No. 3 (Sept. 1988), by Professor Thomas N. Rubinstein. Id.

¶ 11. Recognizing certain limitations inherent in Professor

Rubinstein’s figures, see id. ¶¶ 11-12, the Commission solicited

“comment on whether other data are available that would allow

[it] to expand the application of clutter loss considerations, and

whether there are other approaches that are scientifically

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supported and could be integrated into the ILLR model to take

into account losses due to vegetation and man-made structures.”

Id. ¶ 11.

Various broadcasters, satellite carriers, and engineers

commented upon the proposed rule. Many criticized the

methodology underlying the Rubinstein data and one engineer,

Richard L. Biby, submitted an alternative set of clutter loss

figures. Most significant, an empirical study jointly submitted

by the National Association of Broadcasters and the Association

for Maximum Service Television, Inc. compared “approximately

1,000 intensity measurements,” taken during field testing in five

geographic regions, with the signal strength predicted by the

existing ILLR model and the model as adjusted for clutter loss

based upon the Rubinstein and the Biby data. The NAB/AMST

study reported for each measurement whether the various

models correctly predicted the presence of a Grade B signal,

predicted service at an unserved location (over-predicted), or

predicted no service at a served location (under-predicted). The

study concluded the proposed models were “less accurate” than

the ILLR model already in use because they produced a lower

percentage of correct predictions. Finally, the Associations

argued that the SHVIA required the Commission to leave its

“highly accurate” model in place “[a]bsent an empirically-

validated method of improving the accuracy of the ILLR.” The

NAB/AMST study was the only empirical study submitted by

any commenter, and no commenter, including EchoStar,

criticized the study prior to the Commission’s initial decision.

Relying upon the NAB/AMST study, the Commission

concluded that for both VHF and UHF channels “the ILLR

model without clutter corrections prove[d] superior to [the

alternatives] by making the correct prediction more often.”

Establishment of an Improved Model for Predicting the Broad.

Television Field Strength Received at Individual Locations, First

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Report and Order, 15 F.C.C. Rcd. 12,118, ¶ 14 (2000) (ILLR

Report and Order). With respect to VHF channels, the

Commission concluded that reducing predicted signal strength

to take account of clutter loss would “make the ILLR model less

accurate because it already produces more under-predictions

than over-predictions.” Id. Accordingly, the Commission set

the “clutter loss values for VHF channels to zero,” id. ¶ 15,

thereby leaving the results generated by the model unchanged

for those channels. With respect to UHF channels, however, the

Commission concluded an adjustment for clutter loss was

appropriate because, by setting clutter loss figures at one third

the levels proposed in the ILLR Notice, it could “produce a

better balance between under-predictions and over-predictions

without adversely affecting the overall percentage of correct

predictions.” Id.

EchoStar petitioned for reconsideration, arguing the

Commission had “abdicated its responsibility” under the SHVIA

to take into account clutter loss values in its predictive model for

VHF channels. EchoStar also objected that the Commission had

relied upon the NAB/AMST study without having made the

supporting data available for comment. (The two Associations

later filed those data with the Commission, approximately one

month before EchoStar’s reply was due.) Finally, EchoStar

argued the Commission had unlawfully refused to permit it to

conduct on-site signal strength tests at the premises of customers

who claim to have been erroneously identified as served, rather

than requiring those customers to pursue the waiver and testing

process outlined in 47 U.S.C. §§ 339(c)(2), (4), of which more

later.

The Commission denied EchoStar’s petition, explaining it

had not “ignore[d]” clutter loss but rather had “made a

considered determination that the most accurate ILLR

predictions for VHF stations under certain groundcover

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conditions, including buildings, are made by setting the

corresponding loss values to zero.” Establishment of an

Improved Model for Predicting the Broad. Television Field

Strength Received at Individual Locations, Memorandum

Opinion and Order, 19 F.C.C. Rcd. 9964, ¶ 13 (2004)

(Reconsideration Order). The Commission also noted that the

data underlying the NAB/AMST study “ha[d] been publicly

available since well before” it issued the ILLR Notice, that the

Associations had filed the data in the record since issuance of

the final rule, and that EchoStar had “reviewed and utilized the

raw data in its arguments.” Id. ¶ 10. Finally, the Commission

rejected EchoStar’s argument that the statute permits it, instead

of following the waiver and testing procedures in 47 U.S.C. §§

339(c)(2), (4), to conduct its own on-site testing for customers

claiming to be unserved by over-the-air signals from network

affiliates. EchoStar now seeks review of the ILLR Report and

Order and the Reconsideration Order.

II. Analysis

EchoStar makes three arguments: The Commission (1) by

setting to zero the clutter loss term in the ILLR model for VHF

stations, violated 47 U.S.C. § 339(c)(3); (2) by relying upon data

not in the record, failed to comply with the notice and comment

requirements of the Administrative Procedure Act, 5 U.S.C. §§

553(b), (c); and (3) by refusing to permit EchoStar and its

customers to bypass the waiver and testing process outlined in

47 U.S.C. §§ 339(c)(2), (4), violated what it identifies as a

principle in the SHVA and the SHVIA that on-site testing is the

only way conclusively to determine whether a household is

served or unserved. We review an agency’s interpretation of a

statute it administers under the familiar two-step process

delineated in Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984). First, we must

determine whether “the intent of Congress is clear.” Id. at 842.

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If so, then “that is the end of the matter.” Id. If, on the other

hand, “the statute is silent or ambiguous with respect to the

specific issue, the question for the court is whether [the]

agency’s answer is based on a permissible construction of the

statute.” Id. at 843.

A. Land Cover

EchoStar first argues the Commission failed to “ensure that

[its predictive] model takes into account terrain, building

structures, and other land cover variations.” 47 U.S.C. §

339(c)(3). According to EchoStar, the clear import of the statute

is that the Congress “intended the ILLR predictive model to give

dissimilar predictions based on dissimilarities in land cover”; the

Commission has discretion regarding “how to incorporate land

cover variations” but not regarding “whether to give them

effect.” Therefore, argues EchoStar, the Commission erred

when it set the clutter loss factor to zero for VHF channels rather

than incorporating in the model a term that would vary with land

cover.

The Commission makes two counterarguments, of which

only the second is grounded in the decisions under review.

First, it argues the ILLR model already takes into account land

cover variation because the model “was itself derived from

empirical observations of signal intensity, and those

observations would themselves have reflected some degree of

clutter loss.” Because the statute directs the Commission only

to ensure the model “takes into account” variations in land cover

-- and not specifically to incorporate a variable for land cover --

the Commission argues it has complied with the statute by

determining that “the bias [toward under-prediction] present in

the existing ILLR model has the effect of accounting for land

[cover].” Though some broadcasters made this argument before

the Commission, the agency never adopted it. Because we must

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rely only upon the reasons given by the agency, not “counsel’s

post hoc rationalizations for agency action,” we disregard this

ground for upholding the orders.* Motor Vehicle Mfrs. Ass’n of

U.S. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 50 (1983)

(“It is well established that an agency’s action must be upheld,

if at all, on the basis articulated by the agency itself”); Chamber

of Commerce of U.S. v. SEC, 412 F.3d 133, 143 (D.C. Cir.

2005).

Second, as it did in the rulemaking, the Commission takes

the position that any changes it makes to the model must comply

with the statutory “command that [it] craft a reliable predictive

model.” See 47 U.S.C. § 339(c)(3) (“[T]he Commission shall

take all actions necessary ... to develop ... [a] predictive model

for reliably and presumptively determining the ability of

individual locations to receive signals of [Grade B intensity]”).

According to the Commission, EchoStar’s interpretation would

“read[] reliability out of the statute” by requiring the

Commission to adopt one of the proposed adjustments even

though it would reduce the accuracy of the model. Instead, the

Commission says it conducted a “thorough analysis” of the

adjustments proposed and “made a considered determination

that the most accurate ILLR predictions for VHF stations under

certain groundcover conditions ... are made by setting the

corresponding loss values to zero.” Reconsideration Order, 19

F.C.C. Rcd. 9964, ¶ 13.

*

The passing reference in the background section of the

Reconsideration Order to the Commission’s determination that it

would “improve the accuracy of the ILLR model to assign certain

signal loss values, in addition to those already implicit in the model”

is not enough to preserve the present argument. 19 F.C.C. Rcd. 9964,

¶ 4. The Commission did not then, as it does now, argue that it

complied with the statutory directive to take land cover into account

by recognizing the ILLR model already does so.

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We think “the intent of Congress is clear,” Chevron, 467

U.S. at 842, and the Commission’s reading of the statute clearly

correct. The statutory directives in § 1008 of the SHVIA, 47

U.S.C. § 339(c)(3), to ensure land cover is taken into account

and to establish procedures for the “continued refinement” of the

model are subordinate to the anterior and more fundamental

mandate to design a model that “reliably” predicts signal

strength. Only in the context of “prescribing such [a] model” is

the Commission directed to ensure land cover is “take[n] into

account.” Id. Moreover, § 1008 of the SHVIA should be read

in tandem with § 1005(a)(2) of the same statute. See Motion

Picture Ass’n of Am., Inc. v. FCC, 309 F.3d 796, 801 (D.C. Cir.

2002) (“Statutory provisions in pari materia normally are

construed together to discern their meaning”). The latter

provision amended the Copyright Act, 17 U.S.C. §

119(a)(2)(B)(ii)(I), to require courts, in copyright disputes

between broadcasters and satellite carriers, to rely upon the

ILLR model “as that model may be amended by the

Commission over time under section [1008] ... to increase the

accuracy of that model.” Section 1005(a)(2) plainly

contemplates any revision to the ILLR model adopted pursuant

to § 1008 will “increase,” not decrease, the accuracy of that

model. Therefore, when the Commission determined, with

respect to VHF stations, that the proposed adjustments would

“make the ILLR model less accurate,” it lawfully set the clutter

loss value to zero. ILLR Report and Order, 15 F.C.C. Rcd.

12,118, ¶ 14.

Citing our decision in Colorado v. United States

Department of the Interior, 880 F.2d 481 (1989), EchoStar

nonetheless argues the “Congress, not the Commission,

determined that the time was right to incorporate land cover

variations into the ILLR model, and the Commission had no

power to second-guess that determination.” In Colorado we

held unlawful a model adopted by the Department of the Interior

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(DOI) to assess damages to natural resources from the release of

oil or hazardous substances, as required by the Comprehensive

Environmental Response, Compensation, and Liability Act of

1980 (CERCLA), 42 U.S.C. § 9601 et seq. Colorado, 880 F.2d

at 482. Although the statute expressly provided the DOI

regulations “shall take into consideration factors including, but

not limited to, replacement value, use value, and ability of the

ecosystem or resource to recover,” 42 U.S.C. § 9651(c)(2)(B),

the DOI had promulgated a rule based only upon lost use value

“because adequate data were not available to create a

standardized model based on average values for restoration

costs.” Colorado, 880 F.2d at 491 (quoting 52 Fed. Reg. 9051

(1987)). We rejected this justification for the Department’s

failure to regulate as instructed, reasoning that “data limitations

... cannot justify DOI’s decision to ignore the clear mandate of

Congress.” Id. Here, too, argues EchoStar, the agency simply

ignored an express direction of the Congress because the data (in

EchoStar’s words) “seemed inadequate.”

Actually, this case is quite different from Colorado. As we

explained in the companion case of Ohio v. United States

Department of the Interior, 880 F.2d 432 (1989), our insistence

there that the model incorporate a term for restoration cost was

based not merely upon its inclusion in a list of factors the

regulations were to “take into consideration,” but also upon the

Congress having expressed in other provisions of the CERCLA

a “clear preference for restoration as the basic measure of

natural resources damages.” Id. at 444-46. We thought it

“would be odd indeed for a Congress so insistent that all

damages be spent on restoration to allow a ‘lesser’ measure of

damages than the cost of restoration in the majority of cases.”

Id. at 445. Absent these other provisions making clear the

Congress’s preference for restoration cost, we acknowledged,

the DOI’s argument -- that the phrase “take into consideration”

gave it discretion in applying the listed factors -- would have

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been “a strong one.” Id. at 446. In the present case the clearly

expressed preference of the Congress is for a reliable model and,

as we have seen, acceptance of EchoStar’s proposed clutter loss

values would have derogated from that goal.

This conclusion does not, as EchoStar hyperbolically

contends, render the mandate of § 339(c)(3) “meaningless.”

That mandate is forward-looking and continuing. If EchoStar,

another interested party, or the Commission itself in the future

identifies an adjustment to the model that both varies with land

cover and increases the accuracy of the model, then presumably

the Commission will be obligated to refine the model

accordingly.

B. NAB/AMST Data

EchoStar next argues the Commission violated § 553 of the

Administrative Procedure Act, 5 U.S.C. §§ 553(b), (c), by

failing in a timely manner to make available for public comment

the raw data underlying the NAB/AMST study; indeed, the

Associations did not file those data with the Commission until

after the Commission had promulgated the final rule, and

EchoStar had filed its petition for reconsideration and its reply

was due in about one month. Although the Commission rejected

this challenge in its Reconsideration Order on the ground that

the underlying data were “publicly available” in federal court

and in other Commission records at the time of the rulemaking,

19 F.C.C. Rcd. 9964, ¶ 10, EchoStar claims its efforts to obtain

the data were unavailing and, in any event, it should not have

been required to discover them itself. According to EchoStar,

“there has never been any meaningful way for interested parties

to test the data and point out errors so as to prevent the

Commission from using unreliable information as the basis for

its final rule.”

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The Commission responds that EchoStar was not entitled to

the data because the Commission itself neither had nor relied

upon them when it issued its final rule. Rather, the Commission

based its analysis upon the description, methodology, and results

of the study contained in the public comments filed by the

Associations. See Air Transp. Ass’n of Am. v. FAA, 169 F.3d 1,

7 (D.C. Cir. 1999) (the “critical factual material that is used to

support the agency’s position on review” must be made

available for review).

We need not decide whether EchoStar was entitled to these

data before the Commission issued its final order for the simple

reason that EchoStar, although on notice of the findings and

conclusions of the NAB/AMST study, did not ask for the data

before the Commission issued its final rule. The record reflects

the following sequence of events in 2000: (1) On February 22

the Associations submitted their comments on the ILLR Notice,

in which comments they summarized the findings of their

empirical study, the key finding being that the “ILLR model is

already a highly accurate predictor of whether households

receive -- or do not receive -- a Grade B signal.” (2) On March

14 EchoStar submitted its reply comments, in which it did not

even mention the NAB/AMST study, and the Associations

submitted their reply comments, including a chart comparing the

accuracy of the various models under consideration. (3) On

May 26 the Commission issued the final rule. (4) On July 10

EchoStar petitioned for reconsideration, objecting to the

agency’s reliance upon the NAB/AMST study without having

given other parties an opportunity to comment upon the

underlying data. (5) On July 24 the Associations filed the

underlying data. (6) On August 30 EchoStar filed its reply, in

which it did review and comment upon the data. Finally, in

2004 the Commission issued its Reconsideration Order rejecting

both EchoStar’s procedural objection and its arguments on the

merits of the NAB/AMST study.

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EchoStar asserts “the most critical discussion of the

NAB/AMSTV study ... appeared in the NAB/AMSTV’s reply

comments” filed on March 14, 2000, which included the chart

comparing the accuracy of the proposed modifications and of

the model then in use. Because the Associations’ March 14

filing merely provided further documentation of the study they

had described in their February comments, we are doubtful

about the greater significance of the later filing, but we will

assume as much for the sake of the argument. In any event, as

the Commission points out, EchoStar did not criticize the study

in any way or protest the lack of raw data in its response to the

Associations’ initial comments, in which they described and

relied heavily upon the study; in fact EchoStar did not even

mention the study, which suggests not that EchoStar was

blindsided in March but that its current objection to the

unavailability of the raw data then is an afterthought.

Moreover, EchoStar could have criticized the study, or

requested more time in which to do so, during the two months

between the filing of the Associations’ reply comments and the

issuance of the Commission’s decision. Under the agency’s

liberal ex parte rules EchoStar could have submitted a written

presentation at any time during the rulemaking -- even, as

Commission counsel said at oral argument, at the “11th hour.”

See 47 C.F.R. § 1.1200, 1.1206 (in “permit-but-disclose”

proceedings, including informal rulemakings, “ex parte

presentations to Commission decision-making personnel are

permissible but subject to certain disclosure requirements” until

“the proceeding is no longer subject to administrative

reconsideration or review or to judicial review”); see also Home

Box Office, Inc. v. FCC, 567 F.2d 9, 57 (D.C. Cir. 1977) (“[W]e

recognize that informal contacts between agencies and the

public are the ‘bread and butter’ of the process of administration

and are completely appropriate so long as they do not frustrate

judicial review or raise serious questions of fairness. ... If ex

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parte contacts ... occur, we think that any written document or

a summary of any oral communication must be placed in the

public file established for each rulemaking docket ... so that

interested parties may comment thereon.”). Indeed the parties

to this proceeding, including EchoStar itself, repeatedly availed

themselves of those rules by filing written presentations after the

expiration of the formal filing date.

Arguing that disclosure of the raw data came too late

because the Commission already had issued its final rule,

EchoStar cites Advocates for Highway & Auto Safety v. FHA, 28

F.3d 1288 (D.C. Cir. 1994), where we noted that an “agency is

not likely to be receptive to suggested changes once the agency

puts its credibility on the line in the form of final rules.” Id. at

1292. But it is no doubt for precisely this reason that parties

avail themselves of the opportunities, ex parte or not, to object

to evidence in the record before the Commission adopts a final

rule. Cf. United States v. L.A. Tucker Truck Lines, Inc., 344

U.S. 33, 37 (1952) (“courts should not topple over

administrative decisions unless the administrative body ... has

erred against objection made at the time appropriate under its

practice”).

We also reject EchoStar’s argument, based upon passing

references in the ILLR Report and Order to the Commission’s

“further analysis” and “verif[ication]” of aspects of the

NAB/AMST study, that the Commission developed its own

“data and analysis” upon which EchoStar should have had a

chance to comment. As the Commission explains in its brief --

and the record suggests nothing to the contrary -- these are

references merely to the agency staff’s own cogitations upon the

evidence in the record. Were parties entitled to comment upon

every observation an agency staff member draws from the

record as it accrues, rulemaking proceedings would be

interminable. The APA does not contemplate so exquisite a

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process. Cf. Cmty. Nutrition Inst. v. Block, 749 F.2d 50, 58

(D.C. Cir. 1984) (“Rulemaking proceedings would never end if

an agency’s response to comments must always be made the

subject of additional comments”).

C. Waiver and Testing

If the ILLR model predicts a certain household is served

and its satellite carrier accordingly denies it retransmission of a

distant network signal, then the satellite subscriber may ask the

network station (through the satellite carrier) for a waiver of that

denial. 47 U.S.C. § 339(c)(2). If the network station denies the

waiver, then the subscriber may request an independent field test

of signal intensity in order to show that the subscriber’s

household is in fact unserved. See id. § 339(c)(4)(A). The

satellite carrier and the network station or stations may jointly

select a qualified and independent tester or, if they are unable to

agree, then a tester will be designated by an independent and

neutral entity, id. § 339(c)(4)(B), for which role the Commission

has chosen the American Radio Relay League. ILLR Report and

Order, 15 F.C.C. Rcd. 12,118, ¶ 23. The cost of the test is

assigned to the satellite carrier or the broadcaster depending

upon the result of the test; the loser pays. 47 U.S.C. §

339(c)(4)(B).

EchoStar contends that a satellite subscriber claiming to live

in an unserved household incorrectly identified by the predictive

model as being served may truncate the potentially time-

consuming waiver and testing procedure specified in 47 U.S.C.

§§ 339(c)(2), (4), and instead simply present to the network

station the result of an independent field test showing the house

is unserved. According to EchoStar, because the most reliable

determinant of whether a person is unserved is a signal strength

test, and because the “waiver/loser-pays system was adopted to

ease the burden on satellite operators, who might otherwise bear

17

the full cost of the testing,” it follows that a subscriber should be

able to skip the waiver procedure by having his house tested,

provided the satellite carrier agrees to pay for the test.

In support of this view, EchoStar points out that under the

SHVA, “actual measurement of signal strength at the household

premises [was] the only conclusive way to determine whether

the household [was] unserved.” See SHVA Order, 14 F.C.C.

Rcd. 2654, ¶ 45 (“Individual testing is the key mechanism under

the SHVA for proving that a specific household is unserved”);

17 U.S.C. § 119(d)(10)(A) (defining an “unserved household”

as a household that “cannot receive, through the use of a

conventional, stationary, outdoor rooftop receiving antenna, an

over-the-air signal of a primary network station affiliated with

that network of Grade B intensity”). Therefore, reasons

EchoStar, § 339 merely provides “an additional process” by

which a satellite provider may establish that a household is

unserved; it is more time consuming, but offers the satellite

provider the possibility of shifting the cost of testing to the

network affiliate pursuant to the “loser pays” requirement of §

339(c)(4). Still, says EchoStar, “[n]othing in the text of [§ 339]

explicitly made the waiver process exclusive” of the prior less

elaborate procedure. Moreover, we are told, nothing in 17

U.S.C. § 119, which gives a satellite provider a statutory license

to retransmit distant network signals to “unserved households,”

alters the principle that “[m]easurement is the fundamental

method for determining whether the ‘unserved household’

condition is met.”

The Commission is not unsympathetic to the policy

argument underlying EchoStar’s position; it noted in its

Reconsideration Order that “EchoStar has raised a valid public

interest concern with the efficiency of the process used to

determine SHVIA eligibility.” 19 F.C.C. Rcd. 9964, ¶ 24. The

Commission further noted, however, that the “statute delineates

18

a specific sequence of events preceding testing: waiver request,

waiver denial, the subscriber’s request for an on-site test,

selection of a qualified tester by the satellite carrier and the

network station, and then the on-site test.” Id. ¶ 23. Inferring

the Congress intended that the sequence detailed in the statute

be exclusive, the Commission rejected EchoStar’s claim of right

to a streamlined process.

We agree with the Commission. Pre-SHVIA, in the

absence of any express statutory guidance to the contrary, the

Commission reasonably may have concluded that individual

testing was “the key mechanism” for determining whether a

household was unserved, SHVA Order, 14 F.C.C. Rcd. 2654, ¶

45, but the statute is no longer so opaque. Instead, a prediction

of the ILLR model presumptively establishes whether a

household is unserved, 17 U.S.C. 119 § (a)(2)(B)(ii)(I), and §§

339 (c)(2) and (4) lay out an elaborate procedure for requesting

a waiver from a denial of service based upon, and for testing the

result of, that prediction. Moreover, we note that EchoStar’s

claim that it may circumvent the procedures in § 339 so long as

it pays for an on-site measurement by an independent tester,

because its right to do so pre-dates and survives the SHVIA,

does not square with § 1005(a)(2) of the SHVIA, 17 U.S.C. §

119(a)(2)(B)(ii)(II). That provision directs that for “purposes of

site measurements to determine whether a person resides in an

unserved household under [17 U.S.C. § 119(d)(10)(A)], a court

shall rely on [47 U.S.C. § 339(c)(4)],” which is the very

provision that prescribes what EchoStar calls the “unnecessarily

inefficient and burdensome” process for testing that it seeks to

avoid. EchoStar points to nothing in the statute to support its

conclusion that it may bypass the procedures in § 339 by

conducting its own on-site testing; nor do we see how one can

square the above-referenced instruction to courts with any

procedure other than that in § 339.

19

In sum, the Commission’s reading of the SHVIA is the only

reasonable one; EchoStar’s contrary reading finds no support in,

and is actually inconsistent with, the statute. We therefore

uphold the Commission’s reading under Chevron step one and

end our inquiry here. See Chevron, 467 U.S. at 842 (if “the

intent of Congress is clear,” then “that is the end of the matter”).

III. Conclusion

For the foregoing reasons, EchoStar’s petitions are

Denied.