National Cable & Telecommunications Ass'n v. Federal Communications Commission

CABLE & TELECOMMUNICATIONS NATIONAL IATI ASSOC

ON, Petitioner COM

FEDERAL COMMUNICATIONS United States

MISSION

America, Respondents Inc., al., et Intervenors.

AT&T 08-1016,

Nos. 08-1017. Appeals, States Court of

United Circuit.

District Columbia

Argued April 2009. May

Decided

apartment buildings other multi-unit developments anti-competitive have an ef- market, fect on the cable the Federal Communications Commission banned such contracts. The Commission believes that a these deals—which involve cable compa- ny exchanging a valuable service like wir- ing a for the exclusive building right to provide may service to the be residents — regulated of the under section 628 Com- argued the for Paul M. Smith cause company munications Act as cable prac- Cable & Telecommuni- petitioner National impair tices that significantly ability of Association. With him on the cations competitors programming their to deliver Brenner, Daniel L. Neal M. briefs were The Commission consumers. thus for- and Michael S. Schooler. Goldberg, only cable from operators bade not enter- argued Ames the cause for Matthew C. contracts, ing exclusivity into new but also Housing National Multi Council enforcing Petitioners, from old ones. asso- and Association and Apartment National ciations representing operators cable and Insti- Housing Manufactured intervenor owners, apartment argue building that the tute. him on the briefs was John With statutory exceeded author- McDermott. ity, arbitrarily departed precedent, from Marcus, Counsel, Joel Federal Commu- and otherwise violated the Administrative Commission, argued nications the cause Having carefully Procedure Act. consid- the brief for On were Mat- respondent. parties’ submissions, ered the excellent Counsel, Berry, Joseph thew R. B. General disagree and conclude Commis- Counsel, Palmore, Deputy General Daniel acted sion well within the bounds of both Counsel, M. Associate General Armstrong, general section 628 and administrative law. Bourne, Nancy and Laurence N. Counsel. Garrison, O’Sullivan, and C. Catherine G. I. Limarzi, Attorneys, Kristen De- C. Understanding controversy re- Justice, partment appearances. entered quires begin explaining that we a few argued McBride cause Andrew G. unintuitive statutory terms. The provi- Inc., AT & T intervenors et al. With 628(b) here, sion at issue section of the Turner, him Joshua on the brief were S. Act, Communications makes it unlawful Gary David Rybicki, Phillips, C. Christo- “for a ... operator engage cable Heimann, Glover, pher Michael E. Ed- M. unfair or methods of unfair or Shakin, Johnson, ward H. and William deceptive practices, purpose acts or or Harry F. Cole. significantly effect which is to hinder or GARLAND, TATEL and Before: prevent any multichannel pro- video SILBERMAN, Judges, Circuit and Senior gramming distributor from providing sat- Judge. Circuit ellite programming cable satellite

broadcast programming subscribers or 548(b). § consumers.” 47 U.S.C. “Cable operators” just companies are that deliver TATEL, Judge. Circuit cable, programming by like video Comcast See 47 exclusivity agreements Time-Warner. U.S.C. Finding that be- 522(5)-(7). § companies tween video pro- owners “Multichannel (MVPDs) and, basis, if building-wide or unit-to-unit are distributors” gramming provide so, vid- companies represent set of a reasonable broader what would MVPDs to subscribers. programming eo Reviewing cap.” Id. at like Com- only operators include available, evidence then satellite also direct broadcast cast but found that there was no “sufficient basis 522(13). § companies like DirecTV. See cap this record to ban or the term of programming” “satellite cable Although ¶ 68; Id. at exclusive contracts.” dif- programming” broadcast and “satellite ¶¶ 1369-70, 69-71. also id. they originate slight- fer somewhat— later, years Four the Commission re entities, compare ly different kinds contracts in a rule- turned 605(d)(1), 548(i)(l), § 47 § and U.S.C. solely question. to that making devoted 548(i)(3) essentially § terms with —both ¶¶ 20, 235-64, 22 1- at See F.C.C.R. (i.e., television programming refer to Analyzing competitive harms and shows) transmitted to MVPDs via satellite clauses, of see id. at benefits to subscribers. For for retransmission ¶¶ 20,241-51, 11-29, the this Commission point purposes, important our about “exclusivity time concluded that clauses dispute them is this: nowhere significant cause harm to and finding pro- that “most the Commission’s satellite” and so that the record did not reflect gramming is delivered via consumers categories. of two falls within one these Wiring at the time of our 2003 Inside ¶ Exclusive Service Contracts Provision Order,” 20,248-49, 26; id. id. at see also Dwelling Multiple Video Services in ¶¶ 20,249-51, at 27-29. And because the of Develop- Estate Units and Other Real the record now Commission found (“Order”), 20,- 22 ments F.C.C.R. supports regulation, this time it extensive (2007). 628(b)’s n. 43 132 Section ly analyzed authority its to ban such con plain prohibit company terms thus tracts, concluding that both section 628 effect of practices purpose with “ancillary authority” empower and its to MVPDs, competing including preventing ¶¶ 20,254-64, act. Id. at 40-60. The Com companies, providing other cable from accordingly prohibited cable com predominant types programming two to panies “enforcing existing exclusivity consumers. executing containing clauses and contracts The first considered exclu- ones,” 20,251, 30, rejecting at new id. sivity operators contracts between cable 20,- options, more at limited remedial id. multiple dwelling units so-called ¶¶ 251-54, 33-39. (MDUs) ancillary part as an of its “2003 Petitioners, industry group ” In Wiring Inside Order. See re Telecom- National called the Cable & Telecommuni- Wiring, munications Services Inside 18 (NCTA) pair cations and a Association ¶¶ (2003). 1342, 1366-70, 63-71 F.C.C.R. (“real groups affiliated real estate estate proceeding primarily That concerned the petitioners”), find various faults this with wiring ownership status of certain inside They turnabout. regulatory believe MDUs, and the Commission’s order con- justify change the Commission failed to its pre- sidered some thirteen different issues policy to the retroactive consider But wiring sented its new rules. They effects of its action. also believe that Commission also addressed a related issue the Commission ventured into real-estate separate proposed raised notice of jurisdiction affairs over which it has no rulemaking, namely “whether would be a more limited and should have enacted cap appropriate to exclusive contracts fundamentally, they open up potential competition remedy. MDUs to on But most

663 of “satellite Congress’s identification its size exceeded that the Commission believe broad- and “satellite programming” exclu- cable authority regulating 628 section particular, arguing question programming” all. It is to this cast sivity deals read these well- we first turn. that' the Commission has statutory construction that out of the statute. Struc- defined terms II. 628(c), emphasize turally, they section imple- which directs the Commission involves issue Because (b) proce- rules and ment subsection governing of its agency’s interpretation dealing pro- fair between focused on ap framework dures statute, familiar Chevron’s MVPDs, not on vendors and gramming Natural Res. U.S.A v. Chevron plies. Council, 837, 842-43, gener- to service anti-competitive barriers 467 U.S. Def. (1984). First, history they cite legislative And for ally. L.Ed.2d 694 S.Ct. legisla- fore intended his unambiguously sponsor, the bill’s who ask if the statute we E.g., interpretation. “require[ monopoly the cable agency’s ] tion to closes deal, stop refusing Treatment Council stop refusing Hazardous Waste (D.C.Cir.1989). EPA, If F.2d products to other distributors sell so, view and disregard agency’s Cong. Rec. programs,” television unambiguously H6487, Tauzin), effect to the “give (Rep. ex thus address- H6533 Chevron, 467 Congress.” intent of pressed concern that “the hot shows are ing his If 843, the statute H6534; at 104 S.Ct. cable,” id. at see also controlled agen the enough permit ambiguous (“[T]his is says at bill to the cable id. H6533 however, to that we defer cy’s reading, stop you what have industry, You have to it is reasonable. long so interpretation killing your and that is off doing, been ” FCC, Ass’n v. 347 (em- E. Elecs. g., Consumer competition by denying products.’ (D.C.Cir.2003). added)). 299 F. 3d argue Petitioners thus phasis 628(b), enácting Congress section that reading a literal Conceding that on industry cable prevent intended to the do have exclusivity contracts the statute of program- of starving competition its from competing preventing “effect” of the more, nothing less. ming nothing— “providing from satellite MVPDs the concedes part, For its pro broadcast or satellite programming Congress’s primary purpose enact consumers,” subscribers or gramming to expand com ing 628 was indeed section 3:03-3:34, 548(b); Arg. petition § see Oral n programming, not service. petitio 628’s argue section ers nonetheless hardly disposi primary purpose But this is structure, text, history and demonstrate tive, “statutory prohibi argues, because evil addressed to a different it was beyond principal the evil to go tions often Research & Pharm. altogether. Mfrs. Cf. evils, and it reasonably comparable cover 219, 224 F.3d Thompson, Am. v. 251 ultimately provisions of our laws (D.C.Cir.2001) tools (using all “traditional concerns of our principal rather than the interpretation,” including statutory governed.” are legislators by which we structure, “text, legislative and purpose, Servs., Inc., v. Sundowner Oncale at Congress’s intent history,” to ascertain Offshore 75, 79, 140 523 U.S. 118 S.Ct. L.Ed.2d one). Congress, they argue, step Chevron (1998). text, Reviewing the same 201 to service not with barriers was concerned structure, history, the legislative and Com cable com prevent practices but with permit interprets section 628 kinds of obtaining certain petitors agreements of exclusive service regulation public the American programming easily within the literal as an evil that falls Textually, they empha- to watch. wants reasonably providing terms of statute and is satellite cable programming or anti-com- comparable paradigmatic to the satellite broadcast programming to sub- petitive practices specifi- that section 628 548(b) § scribers or consumers.” (empha- cally targets. See F.C.C.R. added). sis comports This breadth ¶¶ 20,254-64, agree. 40-60. We section express purpose “pro- 628’s interest, mot[ing] public convenience, always, Beginning, plain “as with the necessity by increasing statute,” language of the Citizens Coal diversity Norton, the multichannel video Council v. 548(a). market,” (D.C.Cir.2003), programming § U.S.C. nothing we find section Thus, specificity while the unambiguously 628 that forecloses the section 628’s ' interpretation. Commission’s What references to satellite cable and satellite Commission forbade lies within the' literal programming may broadcast reveal 628(b)’s proscription. terms of section In- primary mind, evil that Congress had in deed, exclusivity agreements have both the nothing in the unambiguously statute lim- proscribed “purpose” proscribed and the regulating Commission to anticom- operators “effect”—cable execute them petitive practices in delivery of those precisely they so that can be the sole kinds of programming by methods ad- company serving building, peti- and as dressed to that narrow concern alone. See it, put you tioners themselves “if can’t Oncale, 523 U.S. at 118 S.Ct. 998. building you serve a then can’t deliver argument, For their structural petition- satellite programming and satellite (c) emphasize ers that subsections through broadcast programming,” Arg. Oral 3:29- (f) require of section regulations, rem- 3:34. edies, procedures uniquely suited to sure, Congress To be if specifically problem of unfair dealing over televi- intended to practices having forbid an anti- sion shows between programming vendors competitive effect generally, on service fo controlled competing cusing only particular on two pro kinds of 548(c)' (f). § MVPDs. See Section — gramming would have been an way odd to 628(c)(2)(C), requires which the Commis- accomplish that result. But the existing “prohibit sion to practices ... including language would have been an equally odd exclusive ... prevent contracts a mul- way of proscribing only unfair dealing be tichannel programming video distributor tween programming vendors and MVPDs from obtaining programming,” such well (as submit) because the words represents 548(c)(2)(C), point, § this Congress chose practices focus on 628(e)(1), does section specifically which prevent obtaining MVPDs from satellite authorizes the remedy Commission to vio- cable or programming, satellite broadcast terms, by setting “prices, lations and con- practices but on prevent them from programming,” ditions sale “providing” that programming “to sub 548(e)(1). this, § From petitioners infer 548(b). § scribers or consumers.” Mindful competi- the Commission’s focus on broad, that “statutes written in sweeping- tion for programming service rather than language broad, given should be sweeping uncomfortably fits Congress’s focus Elecs., application,” Consumer 347 F.3d at on programming, not service. 628(b)’s we note section broad and terms, But this structural sweeping prohibit argument which is a dou- practices sword, “the purpose ble-edged perhaps, which is to hinder and its effect second— significantly or prevent any leading edge to multichan sharply against peti- cuts — 628(c) nel video programming terms, distributor By from tioners. section de- is the Nor governed.”). we are of which contents only the “[m]inimum scribes House of 548(c)(2), the Com- one-sided: the legislative history § and as regulations,” 628(b)’s noted, enumer- Congress’s itself section preferred Representatives required regulations specific, ation of contemporane- language to another broad that Con- actually suggests (c) subsection limited to unrea- expressly suggestion ous (b)’s lan- generic subsection intended gress H.R. to deal. See sonable refusals field, see cover a broader guage to (1992). Thus, legis- if § even Cong. 102d 20,256, 44. The Commis- 22 F.C.C.R. all carry petitioners history lative could similarly extend powers sion’s remedial language that liter- way statutory inter- unfair-dealing kinds of beyond the action to the Commission’s ally authorizes foresaw. Congress specifically ventions unambigu- statute proposition that the Indeed, limiting the Commission instead of view, this agency’s ously forecloses author- Congress broadly powers, to those history cannot. legislative “prescribe regula- to ized an insightful counter with Petitioners that is particular conduct specify tions re- Suppose the statute hypothetical. (b),” 548(c)(1), § by subsection prohibited program- the terms “satellite cable placed regulations implement “prescribe programming” broadcast ming or satellite section,” 548(f), appropri- § and to “order “Spanish-language programming.” expressly not with including but ate remedies” option, price-setting still forbid exclusiv- limited Could 548(e)(l)-(2). then, our view Ultimately, § “if by reasoning competi- ity contracts mirrors our view structure of section 628’s building, they pro- can’t tors can’t serve man- Congress particular had a of its text: so, petitioners If have vide Telemundo”? mind, in no but problem of a ifestation statutory grant of a specter raised the intent to unambiguous way expressed bounds, would be hard without for one solely to power limit the Commission’s any industry pressed imagine problem. of the that version having marginal at least a practice not history legislative argument Petitioners’ ability provide competitors’ effect on Al deficiency. from the same suffers particular programming. kinds of considerable evidence though they point to overbreadth ar apparent think this We concerned Congress specifically was that step analyzed at Chevron gument is best programming, dealing unfair over effect, although in that claiming, two — as legislative the no evidence from they offer limit unambiguously not the statute does Congress chose its to show that record that the Commission practices kinds of the limit so as to language having proscribed as the “ef may regulate market abuse of solely particular fect,” act un might the still Commission True, Tauzin in Representative power. by extrapolating from a nar reasonably “say[] to the legislation troduced TV) (i.e., Spanish an effect on row effect kill stop ... industry, “Youhave it, causing re any practice however by denying your competition ing off ” (i.e., generally). That moved TV service H6487, H6533 Cong. Rec. products,’ 138 in goes: has merit as far as it argument principal but the concern (Rep.Tauzin), of practices an overbroad set proscribing locating helps little congressman one effect, statutorily identified with the by chosen all language of the the limits stray para so far from the agency might Oncale, See of both houses. members interpretation to render digm case as its (“[I]t ultimately 79, 118 is S.Ct. 998 U.S. at unreasonable, arbitrary, capricious. than the of our laws rather provisions the Chao, See, by e.g., AFL-CIO legislators our concerns of principal (“[W]hatever (D.C.Cir.2005) ambiguity language to limit the Commission to regu may nugatory exist cannot render restric- Indeed, lating that evil having alone. em imposed.”). That Congress tions has ployed all available statutory tools of con said, argument just go very the doesn’t far struction, suggests any we find little that in this hypothetical case. Petitioners’ de- 628(b) congressional intent to limit section the, rives whatever force it has from fact programming, and so Spanish-language programming . are unable to reading conclude liter rightly would be understood as a niche—a ally permitted is unambigu nonetheless fact that special would lend force to the ously At very’best, peti foreclosed. the Commission, regulating view tioners ambiguity have demonstrated some all affecting Spanish program- service as Congress as to whether intended to allow ming, taking unreasonably was overbroad regulation along contracts objective Congress action to achieve an dealing with unfair over programming— never But intended to authorize. satellite ambiguity the reasonably re Indeed, programming hardly is a niche.' solved favor of its own interpretation. petitioners dispute nowhere that it encom- Thus, 628(b) concluding that au section Order, passes programming,” “most action, thorizes the Commission’s we need 20,255, Thus, F.C.C.R. at 43 n. 132. not consider the ancillary Commission’s regulating exclusivity deals having authority. purpose or effect of hindering delivery of programming, these kinds of the Commis- petitioners’ separate Real estate at barely sion beyond reached paradigm tack on the authority Commission’s has case at all. regard, In this think They little merit. argue that the exclusivi noteworthy that among many narrow- ty ban impermissibly regulates the real er suggested, remedies commenters industry, estate which lies outside the urged one modify Commission to jurisdiction. Commission’s The terms of rule so as to ban exclusivity only deals challenged prohibition apply only to they the extent affect satellite cable or however, companies, they nei satellite programming broadcast alone. require prohibit any ther nor by action end, In are unable to MDUs. See 22 F.C.C.R. at satisfy heavy their prevail burden. To (“We merely prohibit the enforcement one, step they Chevron must show that of existing exclusivity clauses and the exe 628(b) section unambiguously limited to cution of new ones cable operators.” Congress’s principal concern with unfair added)). (emphasis As we have empha program hoarding. Because Section 628’s sized, “no canon of administrative law re actual words reach the behavior the Com quires us to view regulatory scope the prohibited, petitioners are left to agency in actions terms of practical their argue “that the Commission relies almost or even foreseeable effects.” Cable & entirely on a reading literal of the statuto Wireless, FCC, 1224, P.L.C. v. 166 F.3d ry language the most damning criti —not (D.C.Cir.1999). 1230 The alternative is cism when it statutory interpre comes to untenable, every agency as most action has Elecs., tation.” Consumer 347 at F.3d 297 relatively parties immediate effects for be (internal quotation marks and citation yond directly subject those omitted). regulation. text, And while the statute’s just example, questions For one no one the structure, history and support do the jurisdiction Commission’s proposition was, fact, promulgate Congress that principally the 2003 program Wiring concerned with Inside Order even though hoard ing, suggests none Congress myriad chose its it dealt with affecting issues the

667 changing position.”). mi- including critical awareness that it is industry, such MDU wiring sheet as whether behind nutiae Petitioners believe Commission so and “physically rock is inaccessible” reasonably logic has neither disavowed opened competing providers. be must Wiring nor ex- of the 2003 Inside Order ¶¶ 1362-62, 48-53; also F.C.C.R. at 18 logic produce how that could fail to plained FCC, v. Telecomm. Ass’n Nat’l Cable & pre- same outcome on the record now 4808911, 07-1356, WL at *1 No. 2008 exten- Finding sented. Commission’s 2008). (D.C.Cir. 23, “Approximately Oct. change approach discussion of its sive MDUs, live and percent of Americans 30 equal forgiving than our standard more Order, 22 growing.” their numbers are review, disagree. 20,235, 1. put We decline to F.C.C.R. begins with a argument Petitioners’- their out- relating issues cable service In- over-reading of the 2003 substantial authority simply the Commission’s side be: Taking Wiring pre- a few side Order. those also matter to their cause issues context, they ferred sentences out of ar- landlords. gue that the committed itself

III. already express logic: to an where cable increasingly competition, faces effective it claim, APA primary For their inappropriate is to interfere with exclusivi- in deciding “to bar petitioners argue ty competition contracts. And since con- now, [exclusivity after affirma contracts] 2007, 2003,” tinued to increase between 2003 and tively permitting them the Com explain change petitioners own argue, mission failed to its Commission’s arbitrarily capri and acted and heart thus it logic acting differently bars from now. Of ciously. Opening Br. 28. NCTA sure, To petitioners emphasize, be as course, action agency “it axiomatic is Wiring 2003 con- Inside Order does prior either action must be consistent following clude with the two sentences: departure for its or offer reasoned basis “We note that in the MDU Process precedent.” Williams Gas improving, market even with the exis- FERC, ing-Gulf Coast Co. v. 475 F.3d Accordingly, tence of exclusive contracts. (D.C.Cir.2006) (internal quotation 326 we decline intervene.” F.C.C.R. at omitted). it is marks brackets Yet matters, 71. But context and here equally agency axiomatic that is free to clear that have con- makes change long supplies “a mind so contributing a mere fused factor with analysis,” reasoned Motor Vehicle Mfrs. The portions sufficient condition. uncited Ass’n States v. State Farm United note paragraph of that same that commen- Co., 29, 57, Auto. Mut. Ins. pro-competitive ters “identified both (internal (1983) S.Ct. 77 L.Ed.2d anti-competitive aspects of exclusive con- omitted), showing that quotation marks tracts,” and un- that the Commission was being “prior policies and standards are record, “state, able to based on the deliberately changed, casually ig predominantly exclusive contracts [were] nored,” Corp. Boston Greater Television added). anti-competitive.” (emphasis Id. (D.C.Cir.1970) FCC, Indeed, short reading paragraphs the four (Leventhal, J.); Tele see also v. Fox FCC — devoted to the issue in Commission Stations, Inc., —, vision entirety, quite it their we think clear (2009) 1800, 1811, 173 L.Ed.2d 738 S.Ct. unwillingness to (“[T]he the Commission based requirement agency pro that an on absence primarily intervene explanation for its action vide reasoned 1369, display a record. at ordinarily would demand that sufficient See id. ¶ (“[W]e do not find a sufficient in packages relevant, basis are uniquely they this cap record ban or the term of represent highly a compe- effective form of ¶ contracts.”); 1369, exclusive at 69 tition between large, preexisting id.. compa- (“The record does indicate the extent nies that expanded has since the 2003 In- to which exclusive contracts have been uti- Wiring 20,245-46, side at Order. Id. ¶ (“[T]he .....”); lized id. at cur- ¶¶ 19-21. The Commission found that tri- rent justify gov- record is insufficient to ple play competition phone between and caps any ernment-sanctioned length providers cable prices, spurs lowers de- ¶71 (“[T]he ....”); id. at record ployment of advanced technology, and fa- does not support prohibition on exclusive efficiency cilitates simplicity and in the ”). short, In contracts.... the Commis- market. Id. If the incumbent has exclu- acknowledged sion its 2003 Inside Wir- service, rights however, sive to video then ing exclusivity Order that contracts could competitors will be unable to offer a bun- competition either foster over entire build- dle, inhibiting thus entry new and denying ings or foil competition over individual competitive consumers the efficiency and units, and that decision only indicates ¶ triple 20,246, benefits of play. Id. at 21. the record then available was insufficient “These harms to consumers are greater question. Contrary resolve this peti- they than were years ago,” several claim, tioners’ nothing about logic this found, Commission because in 2003 “new commits the abstaining Commission entry by [phone companies] yet had not regulation competition whenever begun scale, on large the recent increase increasing that, easily imagine could —one in fiber construction yet had not material- however much competition improved de- ized, and the popularity triple play was spite exclusivity agreements, it would have ¶ unproven.” 20,245, at Id. improved more without them. Moreover, fully consid- Conversely, petitioners give the Com- contrary ered Specifically, comments. mission far too little credit for its extensive acknowledged the view that exclusivity analysis of this issue in the order before us might contracts spur investment by allow- today. Rather than merely observing, as ing operators cable some certainty that it did in agreements they could recoup costs, their sunk theoretically could have both pro-competi- might enable MDU residents to pool their effects, tive and anti-competitive in. 2007 bargaining power and thus extract extensively analyzed the company 20,247-48, concessions. Id. at question, 20,243- 22 F.C.C.R. at ¶¶ end, In however, 24-25. the Com- ¶¶ 16-29, and concluded that “the mission meticulously rejected these argu- harms significantly outweigh the benefits unpersuasive, ments as finding that ways they did not at the time of the interests of always MDU owners would not Commission’s Wiring 2003 Inside Order.” align residents, with those of the at Id. 16. The Commission found agreements may have signed been before that exclusivity agreements likely would existed, that, even prices, raise limit access pro- to certain many reasons, other the record failed to gramming, delay deployment of fiber substantiate practical reality of these optic and broadband technologies. Id. ¶¶ 20,244-46, 20,246-47, theoretical benefits. See id. at 17-20. It placed particular ¶¶ 22, 20,249-51, emphasis Contrary pe- on 28-29. “triple play” so-called —where phone or companies argument, titioners’ balancing use modern wir- video, ing provide telephone, and inter- harms and benefits did not repudiate the net service as a package. bundled logic Such of the 2003 Wiring Inside Order. Instead, merely the contracts tend to insulate the incumbent very ques- it resolved the the on which Commission found any improve tion from need to its service. record insufficient. earlier Thus, exclusivity we conclude that claus- generally es do not benefit MDU resi- Indeed, analysis were the in even dents. more exten Wiring the 2003 Inside Order sive, expressly even had it committed ¶ 20,250, at 22 F.C.C.R. 28. Given preferred petitioners’ to explanation, together with the rest of analysis would still logic, the Order’s analysis the Commission’s extensive of ex- satisfy our of easily deferential standard contracts, easily clusivity can a Supreme recently As the Court review. clear of driving articulation the concerns it, not put need demon “[the Commission] its basis change policy, well as the for to court’s satisfaction that the strate new, the the reasonable inferences Com- the are than policy for new better reasons updated mission from a significantly drew one; for it reasons the old suffices the marks of our record. This the limits re- the policy permissible the new under view. statute, it, good that there for are reasons it to bet agency and that the believes be dispute Petitioners also certain Television, 129 S.Ct. at ter.” Fox 1811. findings the relevant to Commission’s deci words, contrary of In other the existence sion, including importance the increased of us no agency precedent gives power more triple and the play fact incumbents question than usual Commission’s responding competi are to this increased determinations. We still ask substantive tion by using exclusivity agreements to only whether Commission has ade “lock-up” large clients like MDUs. Id. at explained the reasons its cur quately ¶ 20,240-41, 10. findings These rest on action and whether those reasons rent evidence, however, see, substantial record “ reflect error judg themselves a ‘clear ¶ 20,240-41, e.g., 23-34, nn. id. at 10 & ” FCC, DIRECTV, Inc. v. 110 F.3d ment.’ 20,243, (discussing various commen (D.C.Cir.1997) (quoting State identifying exclusivity ters locking deals as 2856). Farm, 463 U.S. at 103 S.Ct. providers), out competitive and the Com Here, hardly the Commission could have reasonably explained that the lack “good reasons” for its current made exclusivity of even more evidence of claus clearer: it policy believes individual es was attributable to fact that “many capture likely are more consumers unwilling legally MDU are un owners competition in the benefits absence public able to make the contracts contain exclusivity agreements. It reasoned them,” Thus, ing id. although “competition for the MDU” it Commission used evidence before may advantages have some theoretical prediction make a reasonable about the cases in some over for indi likely and future effects of present chang consumers, may not vidual describe ing pressures on the competitive does, if many Even reality cases. setting, market. In that “[substantial evi general we find that the best results require complete dence does factual preserving for consumers come give appropriate record —we must defer ability active play their role predictive ence judgments neces making an choice than individual rather sarily expertise experience involve allowing using cable operators exclusivi the agency.” Time Warner Entm’t Co. individual ty clauses foreclose choice. 1126, 1133(D.C.Cir.2001). addition, above, FCC, In as noted 670

Mounting separate First, complaint, real es we think it readily apparent that petitioners argue tate that the Commission the Commission’s action only has “future arbitrarily by acted rejecting their effect” APA pro as the and our precedents use remedies, posed including alternative that term. The exclusivity case- ban purports to “ by-case adjudication. only argument situation, This alter the present runs ‘the ” aground law, past legal consequences on past bedrock administrative actions.’ FCC, Mobile puts Relay 1, which “the ... Assocs. v. pro choice between 457 F.3d (D.C.Cir.2006) 11 ceeding by general individual, by (quoting rule or Bowen v. Georgetown 204, Univ. litigation Hosp., ad hoc ... 488 primarily the in 219, 468, (1988) 109 formed S.Ct. 102 L.Ed.2d discretion of the 493 administrative (Scalia, J., concurring)). agency.” Petitioners Chenery SEC v. insist Corp., 332 U.S. 194, 203, precedent, under our 1575, “[t]he 67 critical S.Ct. 91 L.Ed. 1995 (1947). question” only is whether The Commis case-by-case approach the “changes sion’s rule legal landscape.” prefer MDU owners makes sense in the Mining Labor, Nat’l Dep’t Ass’n v. 292 context of fact-specific, price-setting (D.C.Cir.2002) (internal F.3d 859 quo 628(d) remedy contemplated by sections omitted). course, tation (e) marks Of if that for violations such as unfair refus render, were all it took to impermis rule als to deal. In the context of a general APA, sible under the spell would the end problem like exclusivity agreements, how of informal rulemaking. We have thus ever, we see considerable wisdom in the repeatedly made clear that an agency or Commission’s determination to “avoid the only der that “upsets expectations based burden that imposed by would be numer prior retroactive,” on law is not Mobile ous adjudications,” individual Assocs., (internal Relay 457 F.3d at 11 F.C.C.R. at judgment 38 — a peti omitted). quotation marks That describes tioners given have us no reason to doubt. precisely this case. Here the Commission IV. impaired has the future past value of bar gains but has not past rendered actions The final presented issue concerns illegal or otherwise sanctionable. “It the Commission’s decision apply its rule often the case that a business will under to existing contracts. According peti take a certain course of conduct based on tioners, this amounts to “directly retroac law, the current and will then find its tive” action barred require the APA’s expectations frustrated when the law ment that “legislative ... given rules be changes.” EPA, Chem. Mgmt. Waste v. future only,” Comm’ns, effect Chadmoore (D.C.Cir.1989). 869 F.2d Such FCC, (D.C.Cir. Inc. v. 113 F.3d expectations, however legitimate, cannot 1997) (internal quotation omitted), marks furnish a sufficient basis for identifying or, alternatively, agency action with impermissibly retroactive rules. harmful, secondarily retroactive effects consider, Commission failed to Petitioners’ argument alternative re- see, e.g., Cablevision, Valley Yakima Inc. garding secondary retroactivity fares FCC, (D.C.Cir.1986) better, somewhat but enough. not well (“[Retroactive modification or rescission Our case law require does that agencies regulation [a] can great cause mischief. balance the harmful “secondary retroactiv- An agency must balance this ity” mischief of upsetting prior expectations or ex- against effects, salutary any, if of ret isting investments against the benefits of roactivity.”). argument Neither per applying their rules to those preexisting suades. See, interests. e.g., Bergerco Canada v. exclusivity 192-93 them Treasury Dep’t, promised that their deals

U.S. (D.C.Cir.1997). alter- by significantly And valid, agree would remain we with the of now-un- ing bargained-for the benefits any that cautious Commission administra- agreements, the exclusivity enforceable lawyer tive would have understood that undoubtedly has created the Commission take precisely the Commission could later secondary effects that of retroactive kinds in against the action decided 2003. That balancing. require agency attention is, may minds agencies change their after argument nonetheless fails for Petitioners’ all, matter of law-—all the a hornbook more reason: the did obvious Commission here, where, as initial decision so the not consider relative benefits expressly the insufficiency based on of to act was the existing applying of its rule to and burdens thus nothing record. We see unreasonable and, analysis, after extensive contracts balancing in the Commission’s of the bene- ex- that enforcement of banning concluded and, following princi- fits and costs familiar Order, 22 contracts was isting essential. review, ples judicial of we decline to reba- ¶ 20,252-53, 35-37. The Com- F.C.C.R. those factors lance for ourselves. “strongly public found it in the prevent harms from exist- interest” V. years,” “to or to ing contracts continue for sum, In challenged order as indefinitely in eases of exclu- “continue fully authorized section 628 and the that last Id. at sivity perpetually.” clauses ¶ Legitimate product agency of careful expectations, 35. reconsideration. undisturbed, noted, largely were left be- petitions for denied. The review are lawfulness of claus- “[t]he cause So ordered. Commission’s] been under [the es ha[d] decade,” scrutiny for a and both the active SILBERMAN, Judge, Senior Circuit and several individual states concurring. taken Id. at already similar actions. had fully agree opinion. I with the court’s 20,252-53, Finally, Petitioners, case, citing the without are would explained operators incumbent relying, part, holding on the natu- reap continue to the benefits of their Trinity Court Church Supreme Holy they monopolies, ral as “will still be able to States, 12 S.Ct. United equipment provide use their MDUs to (1892). case, In 36 L.Ed. 226 to residents wish to continue service who faced Court was with a statute un- 20,- to their Id. at subscribe services.” made equivocally it a crime to assist or 253, 37. encourage any alien to move to the United again, Once we think this extensive dis- perform any “labor or service of States easily cussion the Commission’s satisfies (emphasis Id. at kind.” S.Ct. under our obligation deferential' standard added). brought The Church had minis- The Commission balanced bene- review. England lead a ter New York harms deter- against expressly fits legisla- The congregation. Court looked applying existing mined the rule history Congress tive to conclude that was Indeed, it was worth costs. contracts importation cheap, concerned much narrow analysis devoted as to this a clergy- labor—not the likes of unskilled question as it did to the entire issue ease, (although, just in our nothing man exclusivity contracts in the 2003 Inside legislative history in the indicated limit on claim Wiring petitioners Order which statutory language). broad The Thus, on the they reasonably although relied. fatefully said, may be thing believe that the 2003 order “a with- Court yet the letter of the statute and not within the statute because within its

spirit, nor within the intention of its mak- criticizing

ers.” The seminal article Manning, is John

approach Textualism Statute, Equity and the 101 Colum- (2001). 1,14

bia L.Rev.

Holy Trinity Church has been used Supreme up ever since—at least Court justify statutory recent times—to inter- which, truth,

pretation accorded with a view,

judicial See, policy. e.g., wise Vegetable

NLRB v. Fruit Packers and 58, 72,

Warehousemen Local 377 U.S. (1964).

84 S.Ct. L.Ed.2d 129

However, justices even might who have sympathetic

otherwise been Holy to the

Trinity “methodology” would not have

been inclined to petitioners’ favor policy

position. ATHERTON,

Peter Appellant James

DISTRICT OF COLUMBIA OFFICE MAYOR, al.,

OF the et

Appellees.

No. 07-5195.

United States of Appeals, Court

District of Columbia Circuit.

Argued March 2009.

Decided June

Case Details

Case Name: National Cable & Telecommunications Ass'n v. Federal Communications Commission

Court Name: Court of Appeals for the D.C. Circuit

Date Published: May 26, 2009

Citation: 567 F.3d 659

Docket Number: 08-1016, 08-1017

Court Abbreviation: D.C. Cir.