National Association of Telecommunications Officers and Advisors v. FCC , 862 F.3d 18 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 10, 2016 Decided July 7, 2017
No. 15-1295
NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS
AND ADVISORS, ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED
STATES OF AMERICA,
RESPONDENTS
AMERICAN CABLE ASSOCIATION AND NATIONAL CABLE &
TELECOMMUNICATIONS ASSOCIATION,
INTERVENORS
On Petition for Review of an Order of
the Federal Communications Commission
Stephen B. Kinnaird argued the cause for petitioners. With
him on the briefs were Rick. Kaplan and Jerianne Timmerman.
James M. Carr, Counsel, Federal Communications
Commission, argued the cause for respondents. With him on
the brief were William J. Baer, Assistant Attorney General,
U.S. Department of Justice, Robert B. Nicholson and Steven J.
Mintz, Attorneys, Jonathan B. Sallet, General Counsel, Federal
Communications Commission, David M. Gossett, Deputy
2
General Counsel, and Richard K. Welch, Deputy Associate
General Counsel. Jacob M. Lewis, Associate General Counsel,
and Maureen K. Flood, Counsel, entered an appearance.
Matthew A. Brill, Matthew T. Murchison, Jonathan Y.
Ellis, Matthew J. Glover, Jeffrey Alan Lamken, Rick C.
Chessen, Michael S. Schooler, and Diane B. Burstein were on
the joint brief for intervenors in support of respondents.
Before: HENDERSON and PILLARD, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
GINSBURG.
GINSBURG, Senior Circuit Judge: In 2015, the Federal
Communications Commission reversed a decades-old,
rebuttable presumption that determined whether state and local
franchising authorities may regulate cable rates. Concerning
Effective Competition; Implementation of Section 111 of the
STELA Reauthorization Act, 80 Fed. Reg. 38001 (2015) (the
Order) (to be codified at 47 C.F.R. pt. 76). The National
Association of Telecommunications Officers and Advisors, the
National Association of Broadcasters, and the Northern Dakota
County Cable Communications Commission petition for
review of the Order as an impermissible construction of the
statute and as arbitrary and capricious. We deny their petition.
I. Background
The Cable Television Consumer Protection and
Competition Act of 1992 (the Cable Act), which amended the
Communications Act of 1934, authorized the Commission to
certify a state or local franchising authority to regulate the rates
for basic cable service charged by any cable system that it
3
“finds” is “not subject to effective competition.” Pub. L. No.
102-385, § 3, 106 Stat. 1460, 1464 (codified at 47 U.S.C.
§ 543); § 543(a)(2). The Order addresses the procedures to be
used by the Commission to find a cable system is subject to the
type of effective competition defined in § 543(l)(1)(B), which
the Commission calls “Competing Provider Effective
Competition.” See 80 Fed. Reg. at 38001/3. Competing
Provider Effective Competition is one of the four types of
“effective competition” defined in the Communications Act;
the Order does not affect the procedures for finding any of the
other three types of effective competition. Id. at 38006/1.
Competing Provider Effective Competition has two
requirements: (i) the franchise area is “served by at least two
unaffiliated multichannel video programming distributors
[MVPDs *] each of which offers comparable video
programming to at least 50 percent of the households in the
franchise area”; and (ii) “the number of households subscribing
to programming services offered by [MVPDs] other than the
largest [MVPD] exceeds 15 percent of the households in the
franchise area.” § 543 (l)(1)(B)(i) and (ii).
When it first implemented the Cable Act, the Commission
adopted a rebuttable presumption that cable operators were not
subject to effective competition. Implementation of Sections of
the Cable Television Consumer Prot. & Competition Act of
1992 Rate Regulation, 8 FCC Rcd. 5631, 5669-70 (1993) (1993
Order). A cable operator that wanted to avoid rate regulation
bore the burden of proving it was subject to effective
competition. Id. The cable operator or an “other interested
party” could “petition” the Commission to “revoke the
jurisdiction of such authority.” § 543(a)(5).
*
MVPDs, which provide video programming directly to subscribers,
include direct broadcast satellite (DBS) services.
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In the Order under review, the Commission, citing a
changed competitive landscape, reversed the presumption. See
80 Fed. Reg. at 38001-02. Under its new Order, the
Commission presumes there is Competing Provider Effective
Competition and places the burden upon the franchising
authority that wants to regulate basic cable rates to prove there
is not effective competition in its area. Id. The Order also,
with certain narrow exceptions not relevant here,
automatically, i.e. without receiving a petition from the
affected cable operator or any other “interested party,”
terminated previously issued certifications of no effective
competition. Id. at 38008.
The Commission based its authority to promulgate the
Order primarily upon § 623 of the Communications Act, 47
U.S.C. § 543, as it was before the changes dictated by the
STELA Reauthorization Act of 2014 (the STELAR Act), Pub.
L. No. 113-200, § 111, 128 Stat. 2059, 2066 (codified at 47
U.S.C. § 543(o)), which further extended the Satellite
Television Extension and Localism Act of 2010 (STELA), Pub.
L. No. 111-175, 124 Stat. 1218. See 80 Fed. Reg. at 38005.
The Order would implement the STELAR Act insofar as it
requires the Commission to “establish a streamlined process for
filing of an effective competition petition pursuant to [§ 543]
for small cable operators.” 47 U.S.C. § 543(o)(1); 80 Fed. Reg.
at 38005. The STELAR Act also provides that “[n]othing in
this subsection shall be construed to have any effect on the duty
of a small cable operator to prove the existence of effective
competition under this section.” § 543(o)(2). The Commission
reasoned that the Order fulfilled the requirements of the
STELAR Act because it “establish[ed] a streamlined process
for all cable operators, including small operators, by
reallocating the burden of providing evidence of Effective
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Competition in a manner that better comports with the current
state of the marketplace.” 80 Fed. Reg. at 38005/1.
In the Order, the Commission describes how market
conditions had changed since it erected the original
presumption in 1993. 80 Fed. Reg. at 38002-04. For example,
in 1993:
Incumbent cable operators had captured approximately
95 percent of MVPD subscribers. In the vast majority
of franchise areas, only a single cable operator provided
service and those operators had “substantial market
power at the local distribution level.” DBS service had
not yet entered the market, and [phone companies] had
not yet entered the MVPD business in any significant
way.
Id. at 38002/1-2 (quoting Implementation of Section 19 of the
Cable Television Consumer Prot. & Competition Act of 1992,
9 FCC Rcd. 7442, 7449 (1994)).
Today, however, the Commission found two unaffiliated
DBS providers each offer “comparable video programming” to
almost all homes in the United States. Id. at 38002-03. The
Commission determined that fact alone “presumptively
satisfies” the first part of the Competing Provider Effective
Competition test for all franchise areas. Id. at 38003.
The Commission found the second part of the test was
likely satisfied for most franchise areas because, in the nation
as a whole, “competitors to incumbent cable operators have
captured approximately 34 percent of U.S. households, or more
than double the percentage needed to satisfy the second [part]
of the competing provider test.” Id. at 38003/3. In addition,
the Commission cited evidence submitted by the National
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Cable and Telecommunications Association that subscription
to providers other than the largest MVPD exceeded 15% in all
210 Designated Market Areas in the United States, id., though,
as the Commission acknowledges in its brief, Designated
Market Areas are not the same as the “franchise area[s]”
specified in the Communications Act.
II. Analysis
The Petitioners challenge the Commission’s rulemaking as
an impermissible interpretation of the Communications Act.
The Petitioners also challenge the presumption of effective
competition as arbitrary and capricious.
A. Consistency with the Communications Act
Because here the Commission exercised the authority
delegated to it by the Congress “generally to make rules
carrying the force of law,” United States v. Mead Corp., 533
U.S. 218, 226-27 (2001), we must decide whether the Order
implements “a lawful construction of the … Act under
Chevron,” Nat’l Cable & Telecomms. Ass’n v. Brand X Internet
Servs., 545 U.S. 967, 974 (2005) (citing Chevron U.S.A. Inc. v.
Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)). “If a statute
is ambiguous, and if the implementing agency’s construction is
reasonable, Chevron requires a federal court to accept the
agency’s construction of the statute, even if the agency’s
reading differs from what the court believes is the best statutory
interpretation.” Brand X, 545 U.S. at 980.
The Petitioners contend the new presumption of effective
competition and the Commission’s termination of previously
issued certifications violate the Communications Act for three
reasons. First, they say the Commission’s procedures do not
fulfill the prerequisite to rate deregulation that the Commission
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“finds … effective competition” in each individual “franchise
area.” § 543(a)(2) & (l)(1)(B). Second, they challenge the
Commission’s authority to revoke a previous certification
without a petition from “a cable operator or other interested
party,” as contemplated by the Communications Act.
§ 543(a)(5). Third, the Petitioners argue the Commission’s
rule violates the STELAR Act by entirely eliminating the
petitioning process, instead of “establish[ing]” the
“streamlined process” required by that statute. § 543(o)(1).
1. The presumption
The Petitioners argue the Communications Act
unambiguously requires the Commission to use franchise-
specific evidence – not a rebuttable presumption based upon
nationwide data – because it requires that the Commission
“find[]” Competing Provider Effective Competition based
upon actual conditions “in the franchise area.” § 543(a)(2) &
(l)(1)(B).
As a preliminary matter, we agree with the Commission’s
assertion that it did not rely solely upon nationwide data in
finding franchise areas are now subject to effective
competition. The Commission first gave each franchising
authority an opportunity to rebut the presumption before
finding effective competition in its franchise area. 80 Fed. Reg.
at 38004/2. Contrary to the Petitioners’ assertion, that
procedure meets the requirement, in their words, that the
Commission make “the determination of effective competition
... on the basis of a franchise area.”
Even so, the Petitioners challenge the permissibility of the
Commission’s reliance upon “the absence of any relevant
franchise-area evidence.” We agree with the Commission that
its new procedure cannot be properly characterized as having
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“no evidentiary foundation”; instead, the Commission relied
upon evidence that the “vast majority” of franchise areas face
effective competition. Petitioners also argue the failure of a
franchising authority to refile a certification request that rebuts
the new presumption is not evidence of effective competition
because a franchising authority may fail to act for a variety of
reasons unrelated to competition. The Commission
acknowledged “that some franchising authorities have limited
resources,” a situation the agency acted to mitigate by
“ensur[ing] that franchising authorities will have access to the
information needed to demonstrate a lack of Competing
Provider Effective Competition.” 80 Fed. Reg. 38007-08. In
sum the Commission has provided ample evidence that the
great majority if not all franchise areas now have the benefit of
effective competition, and that any others will have the
opportunity and ability to make themselves known. See 80
Fed. Reg. at 38002-04. And, as the Commission points out,
“[f]ranchising authorities have a powerful incentive to come
forward with such evidence: the desire to preserve their
jurisdiction over cable rates.” In the absence of stronger
evidence that the costs of filing or other administrative burdens
are preventing franchising authorities from rebutting the
presumption, the Commission’s inference that there is effective
competition in any franchising authority that did not file a new
certification form is entirely reasonable under these
circumstances.
The Petitioners also contend more broadly that the
Commission may not, by erecting a presumption, ignore the
statutory requirement that it make franchise-specific findings.
We agree with the Commission, however, that the “Congress
did not speak directly to the permissibility of presumptions”
merely because it used the term “finds” in § 543. A finding of
fact may be a “conclusion by way of reasonable inference from
the evidence.” See Beech Aircraft Corp. v. Rainey, 488 U.S.
9
153, 164 (1988) (defining “finding of fact”) (quoting BLACK’S
LAW DICTIONARY 569 (5th ed. 1979)). Here the evidence is
that DBS services are in fact available to households in all
areas, from which the Commission has reasonably inferred
there is likewise effective competition in all areas. Instead of
leaving it at that, however, because the statute operates on an
area-by-area basis, the Commission has made that inference
rebuttable with respect to any individual franchise area.
The cases upon which the Petitioners rely to show a
presumption is categorically inadequate to fulfill a statutory
requirement to make a finding of fact are inapposite. In United
Scenic Artists v. NLRB we invalidated the presumption not
categorically but because, we said, it “simply does not follow
from the premise” and could be “overcome only in
extraordinary circumstances.” 762 F.2d 1027, 1035 (D.C. Cir.
1985) (internal quotation marks omitted). In contrast, here the
Commission has grounded its presumption in strong evidence
of market conditions and facilitated rebuttal where the facts
may warrant it. Cerrillo-Perez v. INS is likewise unhelpful to
the Petitioners because the presumption rejected in that case
was “of doubtful validity” and worked as “a per se exclusion
of a relevant factor” that entirely “relieve[d] [the agency] of its
duty to consider applications on an individual basis.” 809 F.2d
1419, 1426 (9th Cir. 1987) (disapproving presumption that
young children of illegal aliens would always leave with their
parents upon their parents’ deportation). The presumption at
issue here has none of those infirmities.
The Petitioners also claim the Commission “abdicate[d] its
statutory duties” by relying upon franchising authorities to
come forward with the relevant facts about market conditions:
“The Commission must see to it that the record is complete.
The Commission has an affirmative duty to inquire into and
consider all relevant facts.” Scenic Hudson Preservation
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Conference v. Fed. Power Comm’n, 354 F.2d 608, 620 (2d Cir.
1965). The Commission, however, did not “sit back and place
the responsibility for initiating or carrying through essential
inquiries on private parties.” Democratic Cent. Comm. of D.C.
v. Wash. Metro. Area Transit Comm’n, 485 F.2d 886, 905
(D.C. Cir. 1973) (internal quotations marks omitted). On the
contrary, it thoroughly investigated the state of the national
market, found effective competition prevalent, and “took
reasonable steps to assist the development of a meaningful
record” with respect to any local market that a franchising
authority identified as a potential exception to the nationwide
pattern.
The Petitioners also maintain the Commission’s new
presumption is not justified by any “reasons of exigency” of
the sort that supported adoption of a “simple, streamlined
process” for approving certifications of franchising authorities
in 1993; the Commission did not face a 30-day statutory
deadline, as it did in 1993, to make findings of fact for all
franchise areas. See 1993 Order, 8 FCC Rcd. at 5689-90. As
the Commission points out, however, the current rule also
responds to a time sensitive situation: Franchising authorities
continue to regulate rates where there is effective competition
in defiance of the “[p]reference for competition” made express
in the Communications Act and to the detriment of consumers.
Rate regulation of a firm in a competitive market harms
consumers: Prices set below the competitive level result in
diminished quality, while prices set above the competitive level
drive some consumers to a less preferred alternative. See
ALFRED E. KAHN, THE ECONOMICS OF REGULATION:
PRINCIPLES AND INSTITUTIONS, VOL. I 21, 66-67 (1970).
Further, the Petitioners argue the former presumption was
procedurally more reasonable than the current presumption
because, in the old regime, a franchising authority had to state
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it had “reason to believe that this presumption [of no effective
competition] is correct,” which statement the Petitioners argue
is “some evidence” of franchise-specific conditions. See 1993
Order, 8 FCC Rcd. at 6069. The Petitioners once again argue
that in the current regime, the Commission acts “without any
evidence concerning the existence of effective competition in
the franchise area.” The Commission’s procedure here,
however, as in the 1993 Order, did more than simply erect a
presumption; it gave each franchising authority an opportunity
to rebut that presumption. Their failure to come forward to
rebut that presumption is likewise “some evidence” of
franchise-specific conditions.
Because the Congress has not spoken directly to the
question whether the Commission may use a rebuttable
presumption in lieu of case-by-case findings of fact, we analyze
the Commission’s decision under Chevron step two. Based
upon the strength of its nationwide data and the opportunity it
gave each franchising authority to support the opposite
conclusion, we hold the Commission’s use of a rebuttable
presumption to comply with the statutory requirement that it
make a finding on the state of competition in each franchise
area is a permissible construction of the statutory requirement
that the Commission “find[]” “effective competition” before
terminating rate regulation. See § 543(a)(2).
2. Termination of existing certifications
The Petitioners also argue the Communications Act does
not permit the Commission to terminate an approved
certification that there is not effective competition in a
particular franchise area without having received a petition
asking it do so. For this proposition, the Petitioners rely upon
§ 543(a)(5), which says the Commission “shall revoke the
jurisdiction” of a franchising authority to regulate cable rates
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“[u]pon petition by a cable operator or other interested party”
that makes the requisite showing. For support, they quote
Christensen v. Harris County: “[w]hen a statute limits a thing
to be done in a particular mode, it includes a negative of any
other mode.” 529 U.S. 576, 583 (2000) (alteration in original).
As in that very case, however, “that canon does not resolve this
case in petitioners’ favor.” Id.
By its terms, § 543(a)(5) requires the Commission to act
in the specified circumstances; it does not in any way “limit[]”
the Commission to acting only in those circumstances. Again
as in Christensen, this is the better reading when “viewed in the
context of the overall statutory scheme.” Id. As the
Commission points out, because § 543(a)(2) prohibits rate
regulation where there is “effective competition,” the predicate
in § 543(a)(5) cannot be the sole basis for terminating an
outdated contrary certification. Otherwise the
Communications Act would make realization of the Congress’s
“[p]reference for competition” dependent not upon its agent,
the Commission, but upon an interested party taking the
initiative to file a petition.
Contrary to the Petitioners’ assertion, our recent opinion
in Bais Yaakov of Spring Valley v. FCC, 852 F.3d 1078 (D.C.
Cir. 2017), does not suggest a different result. There we held
the Commission lacked authority to require that an opt-out
notice be included in “solicited fax advertisements” based
solely upon a statutory provision that authorized the
Commission to require opt-out notices on “unsolicited fax
advertisements.” Id. at 1082 n.1. We rejected the
Commission’s suggestion “that the agency may take an action
… so long as Congress has not prohibited the agency action in
question.” Id. at 1082. That is not the Commission’s position
here. It is instead that its interpretation of § 543(a)(5) as non-
exclusive, unlike the Petitioners’ reading, is consistent with the
13
statutory “[p]reference for competition” and the prohibition of
rate regulation where the Commission finds there is “effective
competition.” For similar reasons, the Petitioners’ reliance on
Railway Labor Executives’ Association v. National Mediation
Board is unconvincing. 29 F.3d 655, 658 (D.C. Cir. 1994)
(holding the agency could not begin an investigation sua sponte
based upon a statute authorizing it to do so “upon request of
either party to the dispute”). The statute in that case did not
contain a directive similar to the one in § 543(a)(2); here the
Commission would defy a clear congressional directive if it
continued to regulate rates after finding effective competition.
Therefore, we hold, consistent with Chevron step two, the
Commission reasonably interpreted the Communications Act
to allow, after a finding of effective competition, termination
of existing certifications without having to wait for a petition
of the kind referenced in § 543(a)(5).
3. The STELAR Act
The STELAR Act requires the Commission “to establish a
streamlined process for filing of an effective competition
petition … for small cable operators, particularly those who
serve primarily rural areas.” § 543(o)(1). According to the
Petitioners, with its new presumption the Commission has not
“establish[ed] a streamlined process” but rather “abolish[ed]
that process altogether.” The Petitioners also challenge the
breadth of the rule, arguing that the statutory focus upon “small
cable operators” precludes the Commission providing relief for
small and large operators alike. Relatedly, the Petitioners
contend the STELAR Act “ratifies” the 1993 presumption,
which placed the burden of rebuttal upon cable operators,
because it specifies “[n]othing in this subsection shall be
construed to have any effect upon the duty of a small cable
14
operator to prove the existence of effective competition under
this section.” § 543(o)(2).
These arguments are not convincing. First, under the new
rule, if it is to succeed in ending regulation of its rates, a cable
operator must respond to any certification form submitted by a
franchising authority that rebuts the presumption of effective
competition. See 80 Fed. Reg. at 38005/3. As the Commission
notes, “cable operators will continue to bear the burden of
proof regarding effective competition.” If the franchising
authority is nonetheless certified to regulate rates, and the cable
operator later tries again to terminate the jurisdiction of the
franchising authority based upon purportedly changed
circumstances, it must file a new effective competition petition
asking the Commission to revoke that jurisdiction. Because the
presumption was dispelled in the prior proceeding, the operator
will no longer be able to invoke it. Id. Therefore, we agree
with the American Cable Association and the National Cable
and Telecommunications Association that the revised
procedures are more aptly described as having been
“streamlined,” Intervenors’ Br. at 23 (quoting § 543(o)(1)),
rather than “abolish[ed].” The Congress has not spoken
directly to the procedures the Commission must use in a new
“streamlined process,” § 543(o)(1), and the Commission’s
chosen procedures are a reasonable interpretation of § 543(o)
under Chevron step two.
Second, the Congress’s silence regarding large operators
does not imply it prohibited the Commission from changing the
process for them as well. Therefore, pursuant to Chevron step
two, we agree with the Commission’s interpretation that it had
authority under the Communications Act, before it was
amended by the STELAR Act, to adopt these changes. The
Commission reasonably interpreted the STELAR Act to
“neither expand[] nor restrict[] the scope of the Commission’s
15
authority to administer the effective competition process.” 80
Fed. Reg. 38005/2 (citation omitted). By changing the process
for all, the Commission necessarily discharged its obligation
under the STELAR Act to change the process for small
operators.
Third, consistent with Chevron step two, the Commission
reasonably interpreted § 543(o)(2) not to prohibit a “shift [in]
the initial burden of producing evidence from cable operators
to franchising authorities.” Contrary to the Petitioners’
assertion, there is no indication in § 543(o)(2) that the Congress
specifically required cable operators to bear the burden of
submitting the initial evidence. We agree with the Commission
that its Order, in compliance with § 543(o)(2), does not disturb
cable operators’ ultimate burden of proof to establish effective
competition.
For the reasons stated above, we conclude the
Commission’s Order is a permissible construction of the
Communications Act, which we must approve pursuant to
Chevron step two.
B. Arbitrary and Capricious Review
The Petitioners also ask this court to quash the
Commission’s rule as arbitrary and capricious. A rule is
arbitrary and capricious if the promulgating agency
relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect
of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or
is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
16
Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 714 (D.C. Cir.
2011) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)) (internal
quotation marks omitted). More specifically relevant to the
Petitioners’ objection, an administrative body “may only
establish a presumption if there is a sound and rational
connection between the proved and inferred facts.” Chem.
Mfrs. Ass’n v. Dep’t of Transp., 105 F.3d 702, 705 (D.C. Cir.
1997) (internal citations omitted); see also United Scenic
Artists, 762 F.2d at 1034.
For the Commission to find there is effective competition
in a franchise area, there must be at least two unaffiliated
MVPDs each offering their services to 50% or more of the
households in the area. § 543(l)(1)(B)(i). The Commission
must also determine that at least 15% of the households in a
franchise area subscribe to an MVPD “other than the largest”
MVPD (a “competing” MVPD). § 543(l)(1)(B)(ii).
The Petitioners contend, for two reasons, that there is no
rational connection between the nationwide data upon which
the Commission based its presumption of effective competition
in every franchise area and the actual existence of effective
competition in any particular franchise area. First, they
maintain the Commission must have data regarding a specific
franchise area before it can reach any conclusion about
competition in that area. Second, they challenge the
Commission’s reliance upon national data about Direct
Broadcast Satellite penetration because the “national [market]
share of DBS providers does not give any indication as to the
DBS share in each of the 23,506 franchise areas.”
The Petitioners, however, nowhere explain why the
Commission was not justified in inferring that a DBS service
with a nationwide footprint is necessarily available in 100%
17
(or, owing to terrestrial obstacles, nearly 100%) of every
franchise area, thereby more than fulfilling the first statutory
requirement that “at least two unaffiliated [MVPDs] each …
offers comparable video programming to at least 50 percent of
the households in the franchise area.” § 543(l)(1)(B)(i). For
the second statutory requirement, the Commission must find at
least 15% of the households in a franchise area subscribe to a
competing MVPD. § 543(l)(1)(B)(ii). The Commission
provided evidence that the nationwide market share of
competing MVPDs is 34% and the nationwide market share of
DBS services alone is 25.6%. 80 Fed. Reg. at 38003/3 n.15 &
16. We agree with the Commission that this evidence,
combined with the “ubiquitous” national presence of DBS
providers, supports a rebuttable presumption that the 15%
subscription requirement has been met. In reaching its
decision, the Commission also noted that “competing MVPDs
have a penetration rate of more than 15 percent in each of the
210 Designated Market Areas (‘DMAs’) in the United States,
and most DMAs have a DBS penetration rate above 20
percent.” Id. at 38003. These additional data show that the
Commission did not simply rely upon the average penetration
rates of 34% and 25.6%, as the Petitioners argue, but instead
considered the actual penetration rate in much of the country.
We disagree with the Petitioners that the Supreme Court’s
recent decision in Tyson Foods, Inc. v. Bouaphakeo requires a
different result. 136 S. Ct. 1036, 1047-49 (2016) (holding use
of a statistical average in certifying a class was permissible in
part because individual data were unavailable). In that case,
the Court simply did not address whether an agency may
permissibly rely upon statistical evidence in creating a
rebuttable presumption.
The Petitioners also point to the possibility of selection
bias in the fact, upon which the Commission also relied, that
“more than 99.5 percent of the [communities] evaluated” since
18
2013 satisfied one of the four tests for effective competition.
80 Fed. Reg. at 38003/1. The Petitioners contend “[t]he
Commission discounted the possibility that cable operators
were unlikely to file petitions where they lacked evidence of
effective competition.” Nonetheless, the 99.5% success rate
adds support to the Commission’s belief that the new rebuttable
presumption is more closely aligned with current market
realities than is the previous presumption, just as a low rate of
success would detract substantially from the reasonableness of
the new presumption. Further, the Commission bolstered the
case for its reliance upon this statistic with evidence that the
test for effective competition has been met “in the country’s
largest cities, in its suburban areas, and in its rural areas where
subscription to DBS is particularly high,” 80 Fed. Reg. at
38002/3, thereby providing reasonable assurance the effect of
any selection bias is quite modest and does not make the
Commission’s inference unreliable, let alone irrational.
Cablevision, 649 F.3d at 717 (“We generally defer to an
agency’s decision to proceed on the basis of imperfect
scientific information, rather than to invest the resources to
conduct the perfect study”).
Finally, the Petitioners challenge the “usefulness” of the
presumption, asserting that a cable operator can assemble the
evidence needed to determine whether any particular franchise
area satisfies both parts of the effective competition test.
Perhaps so but, as the Commission correctly points out,
efficiency is a valid reason to use a presumption: “A
presumption is normally appropriate when proof of one fact
renders the existence of another fact so probable that it is
sensible and timesaving to assume the truth of [the inferred]
fact … until the adversary disproves it.” Chem. Mfrs. Ass’n,
105 F.3d at 705 (internal quotation marks omitted) (alterations
in original). Here, in addition to being more consistent than is
the old presumption with the Congress’s “[p]reference for
19
competition,” the new presumption economizes on transaction
costs by aligning the Commission’s rules with market realities.
The costs associated with the new presumption are limited to
those relatively few instances in which the facts warrant the
effort to rebut it, whereas the costs associated with adherence
to the old presumption would be incurred in the much greater
number of instances in which it would be rebutted.
III. Conclusion
For the reasons set out above, the petition for review is
Denied.