United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 20, 2001 Decided July 3, 2001
No. 00-1246
National Public Radio, Inc., et al.,
Petitioners
v.
Federal Communications Commission and
United States of America,
Respondents
Cornerstone Community Radio, Inc., et al.,
Intervenors
Consolidated with
00-1255
On Petitions for Review of an Order of the
Federal Communications Commission
Patrick F. Philbin argued the cause for petitioners. With
him on the briefs were John F. Wood, Ernest Thomas
Sanchez, Susan M. Jenkins, Neal A. Jackson, Marilyn
Mohrman-Gillis and Robert M. Winteringham.
Dennis J. Kelly, Lauren A. Colby and John G. Bentley
were on the brief for intervenors Lay Catholic Broadcasting
Network, Spring Arbor College and Cornerstone Community
Radio, Inc.
Cheryl A. Leanza, Andrew Jay Schwartzman and Harold
J. Feld were on the brief for amicus curiae National Federa-
tion of Community Broadcasters.
C. Grey Pash, Jr., Counsel, Federal Communications Com-
mission, argued the cause for respondents. With him on the
brief were Jane E. Mago, Acting General Counsel, Daniel M.
Armstrong, Associate General Counsel, John M. Nannes,
Acting Assistant Attorney General, U.S. Department of Jus-
tice, Robert B. Nicholson and Christopher Sprigman, Attor-
neys. Christopher J. Wright, General Counsel, Federal Com-
munications Commission, entered an appearance.
Before: Ginsburg, Randolph and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Concurring opinion filed by Circuit Judge Randolph.
Tatel, Circuit Judge: The Federal Communications Com-
mission exempts noncommercial educational entities from
participating in auctions for broadcast licenses when they
apply for channels within the portion of the spectrum re-
served for them, but not when they apply for channels in the
unreserved spectrum. In this case, noncommercial edu-
cational broadcasters challenge the Commission's policy, ar-
guing that the Balanced Budget Act of 1997 requires the
Commission to exempt them from participating in auctions
for any channel, reserved or unreserved, and that the Com-
mission's adoption of this policy was arbitrary and capricious.
Finding the Commission's refusal to exempt such broadcast-
ers from auctions for unreserved channels contrary to the
Act's plain language, we vacate the offending portions of the
Commission's order.
I
For more than fifty years, the Federal Communications
Commission has reserved part of the FM radio spectrum and
several television channels exclusively for noncommercial edu-
cational use. In re Applications of WQED Pittsburgh &
Cornerstone Television, Inc., 15 FCC Rcd 202 p 16 (1999),
vacated in part by 15 FCC Rcd 2534 (2000). The Commission
has done this because of the "high quality type of program-
ming which would be available in such stations--program-
ming of an entirely different character from that available on
most commercial stations." Id. (internal quotations omitted).
Not restricted to this spectrum, however, noncommercial
educational broadcasters (NCEs) may also apply for licenses
in the unreserved spectrum, known as "commercial" licenses.
Historically, the Commission allocated licenses for both
reserved and unreserved channels through evidentiary hear-
ings. Seeking to lessen reliance on these time-consuming
hearings, Congress, acting through the Balanced Budget Act
of 1997, amended Communications Act section 309(j)(1) to
provide that if "mutually exclusive applications are accepted
for any initial license or construction permit, then, except as
provided in paragraph (2), the Commission shall grant the
license or permit to a qualified applicant through a system of
competitive bidding." Balanced Budget Act of 1997
s 3002(a)(1)(A), 47 U.S.C. s 309(j)(1). Section 309(j)(2) states
that this competitive bidding authority "shall not apply to
licenses or construction permits issued by the Commission"
for, among other things, NCEs. 47 U.S.C. s 309(j)(2)(C)
(cross-referencing id. s 397(6)).
In an effort to implement the Balanced Budget Act, the
Commission proposed holding auctions for all licenses for
commercial channels, but not for channels reserved for
NCEs. In re Implementation of Section 309(j) of the Com-
munications Act--Competitive Bidding for Commercial
Broad. & Instructional Television Fixed Serv. Licenses, 12
FCC Rcd 22363 p 50 (proposed Nov. 26, 1997). The Commis-
sion would continue allocating the latter through evidentiary
hearings. Although NCEs applying for licenses to operate
stations on the part of the spectrum reserved for them would
thus not have to participate in auctions, those applying for
commercial licenses would. Because commenters disagreed
about whether this approach was consistent with section
309(j)(2), and because the Commission "did not focus on the
complicated nature of this issue in [its] Notice in this proceed-
ing," the Commission solicited a further round of comment.
In re Implementation of Section 309(j) of the Communica-
tions Act--Competitive Bidding for Commercial Broad. &
Instructional Television Fixed Serv. Licenses, 13 FCC Rcd
15920 p 25 (1998). In doing so, the Commission recognized
that if section 309(j)(2) barred it from requiring NCEs to
participate in auctions for commercial licenses, several alter-
natives existed: establishing a special track for processing
NCE applications; adopting a hybrid approach when NCEs
apply (for instance, evaluating applicants initially on a point
system and, if the NCE is thereby eliminated, proceeding to
an auction); or even making NCEs ineligible to apply for
commercial licenses altogether. In re Reexamination of the
Comparative Standards for Noncommercial Educ. Appli-
cants, 13 FCC Rcd 21167 p p 39-44 (1998).
In the resulting Report and Order challenged here, the
Commission answered what it called "[p]erhaps the most
difficult question posed in this proceeding"--how to interpret
section 309(j)(2)--by adopting its initial proposal and exempt-
ing NCEs from competing in auctions only when they apply
for licenses to operate channels in the reserved spectrum.
See In re Reexamination of the Comparative Standards for
Noncommercial Educ. Applicants, 15 FCC Rcd 7386 p 101
(2000); see also id. at p p 101-111. Petitioners--National
Public Radio, the Association of America's Public Television
Stations, the Corporation for Public Broadcasting, and the
State of Oregon (acting on behalf of Southern Oregon Univer-
sity)--seek review of this decision, arguing that it conflicts
with the 1997 Act's NCE exemption and that it is arbitrary
and capricious.
II
In evaluating petitioners' argument that the Commission's
action violates the Balanced Budget Act of 1997, we proceed
under the familiar two-part test of Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
If "Congress has directly spoken to the precise question at
issue ... that is the end of the matter; for the court, as well
as the agency, must give effect to the unambiguously ex-
pressed intent of Congress." Id. at 842-43. Only if the
statute is silent or ambiguous do we defer to the agency's
interpretation, asking "whether [it] is based on a permissible
construction of the statute." Id. at 843.
Arguing that the Commission's action fails step one, peti-
tioners claim that the Act unambiguously forbids the Com-
mission from requiring NCEs to participate in auctions to
obtain licenses for any channel, reserved or unreserved. We
agree. While section 309(j)'s first paragraph directs the
Commission to award licenses through a system of competi-
tive bidding, it only does so subject to limitations set forth in
the second paragraph, one of which expressly denies the
Commission authority to hold auctions for "licenses ... is-
sued ... for [NCEs]." 47 U.S.C. s 309(j)(2). Because this
paragraph's denial of authority is based on the nature of the
station that ultimately receives the license, not on the part of
the spectrum in which the station operates, nothing in the Act
authorizes the Commission to hold auctions for licenses issued
to NCEs to operate in the unreserved spectrum.
This is not to say that the Act's language is perfectly
crafted. For instance, because the exemption refers to the
ultimate recipient of the license, not to applicants for the
license, the Commission apparently has authority to require
an NCE applicant to participate in an auction so long as it
does not ultimately receive a license. But as petitioners
noted at oral argument, to ensure that an NCE never has to
participate in an auction for a license that it ultimately
receives, the Commission must exempt all NCE applicants
from such auctions. Inartful drafting is not the same as
ambiguity. Cf. Meredith v. Fed. Mine Safety & Health
Review Comm., 177 F.3d 1042, 1053 (D.C. Cir. 1999) ("[T]he
presence of a difficult question of statutory construction does
not necessarily render that provision ambiguous for purposes
of Chevron."). Here, the fact remains that under the Act's
plain language the Commission must exempt NCEs from
participating in all auctions. In any event, the Commission
has not argued that the statute is ambiguous for this reason.
Our concurring colleague, advancing another argument not
made by the Commission, believes that the statute is ambigu-
ous for a different reason: the word "issued" in section
309(j)(2) may mean that the section applies only to licenses
already issued, that is, to renewals of existing licenses. But
this is not a plausible reading of the statute: section
309(j)(1)'s grant of bidding authority for licenses is expressly
limited to "initial licenses," not to renewals. 47 U.S.C.
s 309(j)(1). Reading 309(j)(2) as exempting only NCE re-
newals from this authority would thus render the section
meaningless.
The Commission argues not that the statute is ambiguous
for any of these reasons, but rather that it is silent on the
specific question before us, thus requiring us to defer to the
Commission's interpretation under Chevron step two.
"[N]othing in the text of the provision," the Commission
argues, "evinces unambiguous Congressional intent on the
narrow question of competing applications filed by [NCEs]
for a non-reserved channel." Respondent's Br. at 16; see
also In re Reexamination of the Comparative Standards for
Noncommercial Educ. Applicants, 15 FCC Rcd p 106. By
failing to distinguish between reserved and unreserved chan-
nels, however, section 309(j)(2) exempts NCEs that apply for
commercial licenses from participating in auctions. True,
nothing in the Act's text specifically says that NCEs applying
for commercial licences are exempt from auctions. But gen-
eral rules need not list everything they cover: no one would
argue, for instance, that the statutory requirement that the
Commission award licenses to serve "public convenience,
interest, or necessity" does not apply to licenses for AM
stations because the Act does not expressly mention AM
licenses. 47 U.S.C. s 307(a). For the same reason, section
309(j)(2)'s NCE exemption from all auctions means that
NCEs are exempt from auctions for commercial as well as
reserved licenses.
Because statutory language represents the clearest indica-
tion of Congressional intent, cf. Qi-Zhuo v. Meissner, 70 F.3d
136, 140 (D.C. Cir. 1995) ("Where ... the plain language of
the statute is clear, the court generally will not inquire
further into its meaning."), and because the Act's general
language covers all auctions, we must presume that Congress
meant precisely what it said. Extremely strong, this pre-
sumption is rebuttable only in the "rare cases [in which] the
literal application of a statute will produce a result demon-
strably at odds with the intentions of its drafters." United
States v. Ron Pair Enterp., Inc., 489 U.S. 235, 242 (1989)
(internal quotation omitted). The Commission's burden in
rebutting the presumption created by clear language is oner-
ous: the Commission must "show either that, as a matter of
historical fact, Congress did not mean what it appears to have
said, or that, as a matter of logic and statutory structure, it
almost surely could not have meant it." Engine Mfrs. Ass'n
v. EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996); see also Griffin
v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982) (courts
may ignore plain language in a narrow category of cases
where "the literal application of a statute will produce a result
demonstrably at odds with the intentions of its drafters.").
The Commission here has fallen short of this high standard.
The Commission claims that section 309(j)(2) conflicts with
another section of the Act--section 309(j)(1). Cf. Engine
Mfrs., 88 F.3d at 1089 ("The [agency's] strongest arguments
arise from an apparent tension between two aspects of the
authorization regime."). According to the Commission, the
latter directs it to award licenses through competitive bid-
ding, while the former prohibits it from doing so. But we do
not understand how a general rule (section 309(j)(1)) can
conflict with its own exception (section 309(j)(2)). Nor do we
agree with the Commission that following section 309(j)(2)'s
plain language would frustrate the Act's purposes. Cf. Envtl.
Def. Fund, Inc. v. EPA, 82 F.3d 451, 469 (D.C. Cir. 1996)
("Because [a] literal reading of the statute would actually
frustrate the congressional intent supporting it, we look to
the [agency] for an interpretation of the statute more true to
the Congress's purpose."). According to the Commission,
exempting NCEs from auctions for commercial licenses would
undermine Congress's desire to "recover[ ] ... a portion of
the value of the [commercial] spectrum" through auctions. 47
U.S.C. s 309(j)(3)(C). But because the Commission would be
required to use auctions when NCEs have not applied, follow-
ing the plain language of section 309(j)(2) would still increase
the amount of money the Commission recovers. Most impor-
tant, notwithstanding Congress's desire to increase revenue,
it expressly exempted NCEs from participating in auctions,
thus demonstrating that it understood that pursuit of this
goal would be limited by the NCE exemption. "Deciding
what competing values will or will not be sacrificed to the
achievement of a particular objective is the very essence of
legislative choice--and it frustrates rather than effectuates
legislative intent simplistically to assume that whatever fur-
thers the statute's primary objective must be the law." Rod-
riguez v. United States, 480 U.S. 522, 526 (1987).
Nor, finally, do we find anything in the legislative history to
support the Commission's interpretation of the statute. In
fact, what little relevant legislative history exists reinforces
section 309(j)(2)'s plain language. The original House and
Senate bills expressly limited the auction exemption to appli-
cations for "channels reserved for noncommercial use."
S. 947, 105th Cong. s 3001(a)(1) (1997); H.R. 2015, 105th
Cong. s 3301(a)(1) (1997). The House-Senate conference
abandoned this restriction, adopting the exemption as it now
stands. H.R. Conf. Rep. No. 105-217, at 9 (1997). As
petitioners point out, "[w]here Congress includes limiting
language in an earlier version of a bill but deletes it prior to
enactment, it may be presumed that the limitation was not
intended." Russello v. United States, 464 U.S. 16, 23-24
(1983). The Commission offers an alternative explanation for
the deletion: the restriction was originally used as part of an
attempt to define "NCE" and was removed when the confer-
ence substituted a reference to the proper statutory defini-
tion. We need not resolve this debate, for even if the
Commission's account is correct, the legislative history falls
far short of demonstrating that "Congress did not mean what
it appears to have said." Engine Mfrs., 88 F.3d at 1089. We
thus have no reason to believe that Congress meant anything
other than that the Commission may not require NCEs to
participate in auctions, regardless of the type of license they
seek.
III
Because the Commission's order conflicts with Communica-
tions Act section 309(j)(2), we have no need to consider
petitioners' arbitrary and capricious challenge. The petition
for review is granted and the portions of the Commission's
Report and Order requiring NCEs that apply for licenses on
the unreserved spectrum to participate in competitive auc-
tions are vacated.
So ordered.
Randolph, Circuit Judge, concurring: One of the interest-
ing features of a circle is that if you start traveling in one
direction along its rim you will eventually wind up exactly
where you began. The majority opinion starts by declaring
the language of statute "plain." Maj. op. at 2, 6. Why is it
"plain"? Because it is "presumed" that Congress meant what
it said. Id. at 7. What did Congress say? Whatever the
language of the statute makes plain.
The opinion also observes, rather curiously, that although
the statute has a plain meaning, it is not "perfectly crafted"
and represents "inartful [inartistic?] drafting." Maj. op. at
5. Notice the argument assuming its conclusion. The statute
is not perfectly crafted, indeed is grammatically incoherent, if
and only if the majority's reading of it is correct, which of
course is the issue. If the majority is mistaken, as I think it
is, the language of the statute simply conveys what its
authors intended. There is no flaw in its drafting.
Let us now examine the language of 47 U.S.C.
s 309(j)(2)(C) in the context of the entire subsection:
(j) Use of competitive bidding
(1) General authority
If, consistent with the obligations described in
paragraph (6)(E), mutually exclusive applications are
accepted for any initial license or construction per-
mit, then, except as provided in paragraph (2), the
Commission shall grant the license or permit to a
qualified applicant through a system of competitive
bidding that meets the requirements of this subsec-
tion.
(2) Exemptions
The competitive bidding authority granted by this
subsection shall not apply to licenses or construction
permits issued by the Commission--
(A) for public safety radio services, including pri-
vate internal radio services used by State and
local governments and non-government entities
and including emergency road services provided
by not-for-profit organizations, that--
(i) are used to protect the safety of life, health,
or property; and
(ii) are not made commercially available to the
public;
(B) for initial licenses or construction permits for
digital television service given to existing terrestrial
broadcast licensees to replace their analog television
service licenses; or
(C) for stations described in section 397(6) of this
title.
Section 397(6) defines "noncommercial educational broadcast
station" or, NCE.
Attention must be paid to the word "issued" in
s 309(j)(2)--competitive bidding does not apply to "licenses
or construction permits issued by the Commission" for NCEs.
Now if we read this to mean what it says the exemption from
competitive bidding for licenses would apply only to licenses
already "issued." How can that make sense? One answer is
that the auction exemption is limited to renewals of licenses
issued to NCEs in the non-reserved spectrum. In other
words, Congress intended that new licenses may be auctioned
off even if an NCE is vying for the license, but the Commis-
sion should not refuse to renew "licenses [already] ... is-
sued" to stations merely because NCEs cannot compete with
commercial applicants in an auction.
What does the majority offer in response? That "issued"
cannot possibly mean what it means, maj. op. at 5-6--an
answer that refutes the majority's next point that "Congress
meant precisely what it said." Id. at 7. I do not deny the
feasibility of the majority's interpretation of s 309(j)(2)(C)
nor do I deny the possibility of the Commission (not the
court) interpreting the statute in that manner, although it
would be a bit of a stretch. But to claim that the majority's
reading derives from the "plain meaning" of the provision
crosses the boggle threshold.
We ought to just face up to the obvious--this subsection is
a mess. The problem is not just with s 309(j)(2)(C). Look at
s 309(j)(2)(B)--the "competitive bidding authority granted by
this subsection shall not apply to licenses ... for initial
licenses ... for digital television service...." 47 U.S.C.
s 309(j)(2)(B). To what does "licenses for initial licenses"
refer? When asked at oral argument the Commission was as
baffled as we were.
The Commission, at least, did not fall into the trap of
treating the statute as clear when it clearly is not. See maj.
op. at 8-9; In re Reexamination of the Comparative Stan-
dards for Noncommercial Educational Applicants, 15
F.C.C.R. 7386 p 106 (2000). The Commission relied instead
on the idea that some conflict existed between the general
rule embodied in s 309(j)(1), requiring auctions, and the
exception in s 309(j)(2). I agree with the majority that this
rationale cannot be sustained. See maj. op. at 8; In re
Reexamination of the Comparative Standards for Noncom-
mercial Educational Applicants, 15 F.C.C.R. 7386 p 106
(2000). Section 306(j)(2) is an exception; an exception deviates
from a general rule, it does not "conflict" with it. Because
the Commission's explanation for its decision is erroneous, we
must remand under SEC v. Chenery, 318 U.S. 80, 88, 95
(1943).
I therefore concur that the Commission's order must be set
aside and the case remanded to the agency. I do not agree
that on remand the Commission must adopt the majority's
interpretation of s 309(j)(2)(C).