National Ass'n of Telecommunications Officers & Advisors v. Federal Communications Commission, 2017 U.S. App. LEXIS 12139

Background

In 2015 the FCC reversed its long-standing rebuttable presumption that cable operators were not subject to "effective competition," adopting instead a presumption that Competing Provider Effective Competition exists and placing the burden on franchising authorities to rebut it.
"Competing Provider Effective Competition" requires (i) at least two unaffiliated MVPDs each offering comparable video programming to ≥50% of households in a franchise area, and (ii) households subscribing to MVPDs other than the largest exceed 15%.
The FCC based the new presumption on changed market conditions (ubiquitous DBS availability and increased non‑incumbent penetration) and on a record showing a high success rate for petitions demonstrating effective competition.
The Order also terminated many previously issued certifications of "no effective competition" without awaiting petitions from cable operators or other interested parties.
Petitioners (NATOA, NAB, and a local commission) sought review, arguing the Order violates the Communications Act and the STELAR Act and is arbitrary and capricious.
The D.C. Circuit denied the petition, concluding the FCC’s construction is permissible under Chevron and its factual inferences are not arbitrary and capricious.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) May FCC use a nationwide rebuttable presumption to find franchise‑level "effective competition"?	Statute requires franchise‑specific findings; nationwide presumption ignores local evidence.	Nationwide evidence (DBS ubiquity, penetration rates) plus rebuttal opportunity suffices to infer franchise conditions.	Permissible under Chevron step 2; rebuttable presumption rational and compatible with statute.
2) May FCC terminate existing certifications without a petition from a cable operator or "interested party"?	§543(a)(5) requires revocation only "upon petition," so FCC cannot act sua sponte.	§543(a)(5) is not exclusive; §543(a)(2) forbids rate regulation where there is effective competition, so FCC may act to implement statute.	FCC reasonably may terminate certifications without awaiting a petition.
3) Does the STELAR Act require a different, operator‑centered "streamlined" petition process or forbid shifting initial burden?	STELAR requires a streamlined petitioning process for small operators and preserves small operators' duty to prove effective competition; FCC abolished that.	STELAR requires a streamlined process but does not prescribe procedure or limit FCC from applying the process to all operators; ultimate burden on operators remains.	FCC’s procedures reasonably implement STELAR and do not violate §543(o)(2).
4) Is the new presumption arbitrary and capricious given reliance on national statistics and possibility of selection bias?	National averages do not prove local penetration; selection bias and local variation undermine rational connection.	DBS national footprint plus DMA and petition‑record data create a sound inference; rebuttal opportunity mitigates local errors; efficiency supports presumption.	Not arbitrary or capricious; agency had a rational basis and provided rebuttal mechanisms.

Key Cases Cited

United States v. Mead Corp., 533 U.S. 218 (agency rulemaking deference framework)
Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (interpretive deference to reasonable agency constructions)
Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (accepting agency interpretations that are reasonable even if courts might differ)
Beech Aircraft Corp. v. Rainey, 488 U.S. 153 (definition of a factual "finding" as a reasonable inference from evidence)
United Scenic Artists v. NLRB, 762 F.2d 1027 (presumption invalid where inference weak or insurmountable)
Christensen v. Harris County, 529 U.S. 576 (statutory mode‑of‑action canon discussed)
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (arbitrary and capricious standard)