Commty TV Inc v. FCC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 27, 2000 Decided July 7, 2000

No. 98-1106

Community Television, Inc., et al.,
Appellant/Petitioners

v.

Federal Communications Commission,
Appellee/Respondent

Paxson Communications Corporation, et al.,
Intervenors

Association for Maximum Service Television, Inc., et al.,
Intervenor

Consolidated with
Nos. 98-1212, 98-1259, 99-1082

Appeals and Petitions for Review of Orders of the
Federal Communications Commission

---------

 John Griffith Johnson, Jr. argued the cause for petitioners.
With him on the briefs were Gene A. Bechtel, Christopher D.
Imlay, Stephen T. Yelverton, Arthur H. Harding, R. Bruce
Beckner, Jill Kleppe McClelland, and Daniel R. Ball. Rich-
ard F. Swift entered an appearance.

Scott D. Dailard argued the cause for intervenors Paxson
Communications Corporation, et al. With him on the briefs
were John R. Feore, Jr., Barry A. Friedman and David M.
Silverman.

C. Grey Pash, Jr., Counsel, Federal Communications Com-
mission, argued the cause for appellee. With him on the brief
were Christopher J. Wright, General Counsel, Daniel M.
Armstrong, Associate General Counsel, Joel Marcus and K.
Michele Walters, Counsel, Joel I. Klein, Assistant Attorney
General, U.S. Department of Justice, Robert B. Nicholson
and Adam D. Hirsh, Attorneys. Catherine G. O'Sullivan, and
Christopher J. Sprigman, Attorneys, U.S. Department of
Justice, entered appearances.

Jonathan D. Blake was on the brief for intervenor Associa-
tion for Maximum Service Television, Inc.

Before: Edwards, Chief Judge, Henderson and Rogers,
Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Petitioners and intervenors1 seek
review of the Federal Communications Commission's final

__________
1 Petitioners in these consolidated cases are Community Televi-
sion, Inc., Pappas Telecasting of Southern California, LLC, Penn-
sylvania Telecasters Association, and Minority Television Project,
Inc. Intervenors in support of petitioners are Paxson Communica-
tions Corporation, Corridor Television, LLP, and Entravision Com-
munications Company, LLC. For ease of reference we refer to
these parties as "petitioners" except as indicated. Certain other
broadcasters withdrew their petitions or the court dismissed their
challenges, see, e.g., Lindsay Television, Inc. v. Association of
America's Pub. Television Stations, 1998 WL 633809 (D.C. Cir.
Aug. 11, 1998), including Mountain Broadcasting Corporation, which
voluntarily withdrew its petition for review after filing its opening

rules establishing the procedures and timetable under which
television broadcasting will migrate from the now-prevalent
analog technology to digital technology. Digital technology
holds the promise of either greatly enhancing the audiovisual
quality of television broadcasts or of replicating current quali-
ty while liberating substantial portions of the broadcast spec-
trum for other uses. Because of the massive investment
required by broadcasters and consumers, who must purchase
digital televisions or converter devices, to accomplish the
analog-to-digital transition, the rules under review provide for
a ten-year transition period during which licensed broadcast-
ers and those with permits to construct broadcast facilities as
of August 3, 1997, have received an additional channel to
commence digital broadcasting while continuing analog broad-
casts during the transition. At the end of the transition
period, analog transmissions will cease; broadcasters will
retain their new digital channels and give back to the FCC
their analog channels. Thus by statute, essentially all televi-
sion broadcasting in the United States will be exclusively by
digital technology as of December 31, 2006. See 47 U.S.C.
s 309(j)(14)(A)-(B).

To plan for the transition, the FCC indisputably faced
myriad policy choices and a daunting engineering task. Giv-
en the complexity and interdependence of the decisions the
FCC had to make, the trade-offs among competing interests
would be unlikely to satisfy all broadcasters and consumers.
Remarkably then, only a few broadcasters, four petitioners
supported by three intervenors, challenge the final rules now.
They contend that the FCC acted unlawfully by: (1) granting
a second channel to broadcasters whose construction permit
applications had been approved by April 3, 1997, while deny-
ing a second channel to those whose applications had not been
so approved; (2) allotting that second channel to replicate the
area served as of April 3, 1997, even if the broadcaster had

__________
brief in light of the FCC's decision to allow it to trade DTV
channels with another station. See Public Notice, Broadcast Ac-
tions, Report No. 44600, 1999 WL 979570 (Oct. 27, 1999). Separate-
ly, the Association for Maximum Service Television, Inc. intervened
in support of the FCC.

applied to expand the service area as of that date; (3)
adopting and applying its "service replication" principle in a
way that unfairly favored VHF broadcasters over UHF
broadcasters; and (4) deleting Channel 29 in State College,
Pennsylvania and redistributing that spectrum where a
would-be broadcaster had sought to apply to operate Channel
29. While petitioners' challenges may be sympathetic, we
conclude that the FCC's decisions were neither arbitrary,
capricious, nor contrary to law, and accordingly, we deny the
petitions for review.

I.

From its inception, the television broadcasting industry has
relied on a common set of technical standards to maximize the
availability of television. When the FCC made its first
allotment of spectrum for broadcast television in 1941, it also
adopted the basic engineering standards devised by the Na-
tional Television System Committee for monochromatic
(black-and-white) television service.2 See Notice of Inquiry,
In the Matter of Advanced Television Systems and Their
Impact on the Existing Television Broadcast Service, 2
F.C.C.R. 5125, 5126 (1987). That standard, commonly re-
ferred to as NTSC, was revised in 1953 to allow for color
television broadcasting, and again in 1984 to allow for broad-
casts using stereophonic sound. Id. Relying on the NTSC
standard, the FCC maintains the Television Table of Allot-
ments, 47 C.F.R. s 73.606, which is the master plan for
allocating NTSC television broadcast channels to communities
throughout the country. See WITN-TV v. FCC, 849 F.2d
1521, 1522-23 (D.C. Cir. 1988). The Table of Allotments
designates how many full service, low power, and television
translator channels are assigned to each community, see 47
C.F.R. ss 73.601, 73.606, and these designations distinguish

__________
2 These standards include the width of the television broadcast
channel, the precise frequencies for the visual and aural carriers,
the number of lines per frame, the scanning rate and method, the
aspect ratio or width-to-height ratio of the picture, and the audio
mode.

between VHF ("very high frequency") Channels 2-13 and
UHF ("ultra high frequency") Channels 14-69.

Although the NTSC standard proved to be workable for
more than fifty years, in light of the development of new
broadcasting technologies, the emergence of competing stan-
dards, and the growing popularity of cable television, mem-
bers of the television broadcasting industry petitioned for a
rulemaking in 1987 for the adoption of a new and improved
standard for provision of "advanced" television, or "ATV".3
The FCC obliged. See Notice of Inquiry, 2 F.C.C.R. 5125.
The development of the rules under review illustrates the
difficult policy issues and complex engineering challenges
faced by the FCC. At the outset of the rulemaking proceed-
ing, the FCC ordered a freeze on any amendments to the
Television Table of Allotments and on all applications for
construction permits for vacant television channels in the
thirty busiest television markets in order to preserve its
options for reallocating spectrum should that become neces-
sary. See Advanced Television Systems, 776 Rad. Reg.2d
(P&F) 843 (1987) ("Freeze Order"). By 1991, the FCC tenta-
tively opined, and ultimately decided that: migration to a new
standard would be in the public interest; the transition to a
digital standard would not involve rededication of broadcast
spectrum; incumbent broadcasters would be the parties best
suited to implement the transition to a digital standard; a
transition period during which NTSC broadcasts would con-
tinue would be necessary; and the width of a digital channel
would not exceed the NTSC-standard width of 6 MHz. No-
tice of Proposed Rulemaking, 6 F.C.C.R. at 7024 ("NPRM").
To carry out these policies, the FCC proposed to pair DTV
channels with analog licenses, providing incumbent broadcast-
ers with a second 6 MHz channel for digital broadcasts (a
"DTV channel") without charge for use during the transition
period to allow for both digital and NTSC broadcasts. Id. at

__________
3 The FCC adopted the term "ATV" to describe a variety of
competing technologies, each of which would improve upon NTSC
service. See Notice of Proposed Rulemaking, 6 F.C.C.R. 7024, 7024
n.1 (1991).

7025-26. In the period between the initial NPRM in 1991
and 1996, following a series of reports and orders and further
notices of proposed rulemaking, the FCC's transition plan
had been substantially developed.

Then, in 1996, Congress enacted the Telecommunications
Act of 1996, Pub. L. No. 101-104, 110 Stat. 56 (1996) ("1996
Act"), preempting to a limited degree some FCC decisions
related to the analog-to-digital transition. Thereafter the
relevant decisions by the FCC occurred as follows: On July
25, 1996, the FCC adopted its Sixth Further Notice of
Proposed Rulemaking, 11 F.C.C.R. 10968 (1996), in which it
set forth the proposed DTV Table of Allotments showing
which broadcasters would receive which DTV channels.4
Then, on April 3, 1997, the FCC adopted two reports and
orders that are directly at issue. In the Fifth Report and
Order, 12 F.C.C.R. 12809 (1997), the FCC issued initial DTV
licenses to incumbent broadcasters and set forth the timeta-
ble and terms under which the transition to DTV would take
place. In the Sixth Report and Order, 12 F.C.C.R. 14588
(1997), the FCC promulgated the final DTV Table and set
forth its rationale for the decisions reflected therein. In
response to petitions for reconsideration, the FCC reaffirmed,
clarified, and, in some measure, revised its decisions in two
rounds. See Memorandum Opinion and Order on Reconsid-
eration of the Fifth Report and Order ("Service Reconsidera-
tion"), 13 F.C.C.R. 6860 (1998); Memorandum Opinion and
Order on Reconsideration of the Sixth Report and Order
("Allotment Reconsideration"), 13 F.C.C.R. 7418 (1998); Sec-
ond Memorandum Opinion and Order on Reconsideration of
the Fifth and Sixth Report and Orders ("SMOOR"), 14
F.C.C.R. 1348 (1998).

__________
4 On December 27, 1996, the FCC released its Fourth Report
and Order, 11 F.C.C.R. 17771 (1996), which adopted a technical
DTV standard. Petitioners do not challenge the decisions reflected
therein.

 In Part II of this opinion we address whether the FCC was
statutorily barred from issuing DTV licenses in the Fifth
Report and Order, and if not, whether the FCC arbitrarily
failed to grant a second DTV channel to Pappas Telecasting
of Southern California, Entravision Communications Compa-
ny, Corridor Television, and Paxson Communications Corpo-
ration. In Part III we address whether the FCC arbitrarily
decided not to upgrade the service area covered by the DTV
allotments for Community Television, Inc. and Paxson Com-
munications Corporation. In Part IV we address whether the
FCC arbitrarily deviated from its service-replication policy
when assigning Minority Television Project, Inc.'s digital
allotment. And, in Part V we address whether the FCC
abused its discretion in eliminating Channel 29 and reassign-
ing its spectrum when the Pennsylvania Telecasters Associa-
tion sought to apply for a construction permit for the channel
and its petition to waive the Freeze Order was pending.

II.

Pappas Telecasting of Southern California, Corridor Televi-
sion, Paxson Communications Corporation, and Entravision
Communications Company (collectively "the pending appli-
cants") contend that the FCC unlawfully deprived them of a
second channel for digital broadcasting during the transition
period. The FCC's licensing scheme for NTSC channels has
two stages. See Service Reconsideration, 13 F.C.C.R. at 6862
& n.7. A potential broadcaster first applies for a permit to
construct a television station, and, if the permit is granted,
the permittee then applies for a broadcast license. Id. The
FCC proposed to provide a DTV channel to all parties that
held a broadcast license, a construction permit, or had applied
for a construction permit as of the October 24, 1991, adoption
of the NPRM. See Second Report/Further Notice, 7
F.C.C.R. 3340, 3342-44 (1992). In the event of a "spectrum
shortfall" in some communities, licensees and permittees
would receive preference. Id.; see also Third Report/
Further Notice, 7 F.C.C.R. 6924, 6928 (1992). Pappas and
Corridor had both applied for construction permits by Octo-

ber 24, 1991, and were thus, at the time, in the pool of
broadcasters eligible for a second channel.

However, during the rulemaking, Congress passed the 1996
Act, which addressed the issue of eligibility for additional
television broadcast spectrum in the following terms:

If the Commission determines to issue additional licenses
for advanced television services, the Commission--(1)
should limit the initial eligibility for such licenses to
persons that, as of the date of such issuance, are licensed
to operate a television broadcast station or hold a permit
to construct such a station (or both); and (2) shall adopt
regulations that allow the holders of such licenses to
offer such ancillary or supplementary services on desig-
nated frequencies as may be consistent with the public
interest, convenience, and necessity.

47 U.S.C. s 336(a).

In the Fifth Report and Order, the FCC announced that,
pursuant to s 336(a)(1), it had limited initial eligibility for a
DTV channel to existing licensees and permittees as of April
3, 1997. 12 F.C.C.R. at 12814-15. The Fifth Report and
Order also "modified" the licenses or permits of eligible
broadcasters to grant them an "additional" license for use of a
DTV channel, subject to the conditions set forth therein. Id.
at 12838. The FCC embodied its grant of these DTV licenses
in its final DTV Table of Allotments. See Sixth Report and
Order, 12 F.C.C.R. at 14693, app. B. Recognizing that the
final allocation excluded some broadcasters who had been
considered eligible for a DTV channel prior to the 1996 Act,
the FCC stated that it would "give particular consideration
for assigning temporary DTV channels to new licensees who
applied on or before October 24, 1991, given the reliance that
these parties may have placed on rules we adopted before
passage of the 1996 Act." Fifth Report and Order, 12
F.C.C.R. at 12816a n.26.

In its second opinion on reconsideration of the Fifth and
Sixth Reports (SMOOR), the FCC denied requests for paired
channels by those permittees and licensees whose applications

had been pending as of October 24, 1991, but were not
granted until after April 3, 1997. While noting its stated
intent in the Fifth Report and Order to give "particular
consideration" to such applicants, the FCC pointed out that it
had also notified them of their low priority should there be
insufficient spectrum available for DTV channels. SMOOR,
14 F.C.C.R. at 1358-60 & n.36. The FCC also noted that, in
reconsidering the Fifth Report (Service Reconsideration), it
had granted such applicants authority either to construct
DTV stations on their NTSC channels immediately, or to
convert to DTV service later, and had streamlined the appli-
cation process for such analog-to-digital modification. Id. at
1359-60 (citing Service Reconsideration, 13 F.C.C.R. at 6864-
66).

A. s 308(a)'s Written-Application Requirement. Hav-
ing been deprived of "initial eligibility" for a DTV allotment
by the 1996 Act, the pending applicants first raise a statutory
challenge that, if successful, would invalidate the FCC's en-
tire DTV licensing scheme. In the Fifth Report and Order,
the FCC set forth a three-stage process by which it first
determined that all existing broadcasters and permittees as of
April 3, 1997, were granted a digital license to broadcast on
an additional channel. 12 F.C.C.R. at 12838-40.5 The FCC
then established a procedure by which licensees and permit-
tees would apply to construct facilities for digital transmission
and then apply to test and use those facilities. Id. at 12840-
48. Although the FCC stated in the Fifth Report and Order
that it was "issu[ing]" DTV licenses, it at the same time
clarified that the licenses "issued" in fact were modifications
of existing analog television permits or licenses. Id. at 12838.

The pending applicants contend that the FCC's "issuance"
of these DTV licenses contravened s 308(a), which provides in
part that the FCC "may grant construction permits and
station licenses, or modifications or renewals thereof, only

__________
5 The three stages are (1) the initial modified license for DTV,
(2) certification or application for a construction permit, and (3)
application for a license to cover a construction permit for a DTV
facility. Id.

upon written application therefor received by it," subject to
exceptions in times of emergency. 47 U.S.C. s 308(a). They
maintain that the Communications Act required each incum-
bent broadcaster to file a written application for an initial
DTV license with the FCC. The second and third stages of
the process outlined in the Fifth Report and Order each
require a written application. In the pending applicants'
view, the FCC did not comply with s 308(a) until it issued
DTV licenses pursuant to the third stage of the process set
forth in the Fifth Report and Order. Thus, they continue,
the first such license was issued on February 5, 1999, and
that date should be used for determining "initial eligibility"
under s 336(a)(1). Using this calculus, the pending appli-
cants deem themselves initially eligible for a DTV channel
because all of their respective NTSC construction permits
had been granted prior to February 1999.

As an initial matter, the FCC contends that this challenge
was not raised below and thus is not subject to review.
Although it appears that no petitioner directed the FCC's
attention specifically to s 308(a) during the rulemaking, com-
ments by another party to that proceeding provided the FCC
with a sufficient opportunity to consider the issue such that
judicial review is proper. See 47 U.S.C. s 405(a). Specifical-
ly, the pending applicants rely on the comments of the Media
Access Project ("MAP"), that because DTV licenses would be
new licenses, the FCC was statutorily required by 47 U.S.C.
s 308(b) to determine that each broadcaster receiving such a
license was financially qualified. MAP's comments logically
implicated s 308(a)'s written application requirement because
they were directed to the contents of such applications.

On the merits, the court reviews the FCC's interpretation
of the Communications Act under the now-familiar standard
set forth in Chevron U.S.A. Inc. v. Natural Resources De-
fense Council, Inc., 467 U.S. 837, 842-843 (1984), by which the
court considers "whether Congress has directly spoken to the
precise question at issue," id. at 842, and if it has not,
"whether the agency's answer is based on a permissible
construction of the statute." Id. at 843. We do not agree
that the plain language of s 308(a) compels the crimped

reading advocated by the pending applicants. Because the
recipients of the initial DTV licenses were broadcasters with
written applications already on file, s 308(a) must be read in
conjunction with 47 U.S.C. s 316, which allows the FCC to
modify existing licenses,6 and new s 336, added by the 1996
Act, which directed the FCC to limit initial eligibility for DTV
licenses to incumbent broadcasters (or those holding con-
struction permits for a television broadcast facility). Because
Congress did not answer the question of how these provisions
apply to the issuance of DTV licenses, we will uphold the
FCC's harmonization of the relevant provisions so long as it is
reasonable.

In concluding that the FCC's interpretation of its modifica-
tion authority was reasonable, we are instructed by the
court's previous reconciliation of the apparent conflict be-
tween s 308(a) and s 316(a)(1), in holding that "[t]he Com-
mission has power under Section 316(a) ... to modify a
license without an application for the modification having
been made by the licensee." Peoples Broadcasting Co. v.
United States, 209 F.2d 286, 287 (D.C. Cir. 1953). While in
Peoples Broadcasting, the court affirmed the FCC's power to
modify a broadcaster's license by requiring it to shift from
Channel 4 to Channel 8, nothing in the statute or that opinion
suggests that the FCC's modification power is limited to
individual licenses. Rather, the FCC may modify entire

__________
6 Section 316(a)(1) provides:

Any station license or construction permit may be modified by
the Commission either for a limited time or for the duration of
the term thereof, if in the judgment of the Commission such
action will promote the public interest, convenience, and neces-
sity, or the provisions of this chapter or of any treaty ratified
by the United States will be more fully complied with. No
such order of modification shall become final until the holder of
the license or permit shall have been notified in writing of the
proposed action and the grounds and reasons therefor, and
shall be given reasonable opportunity, of at least thirty days, to
protest such proposed order of modification; except that,
where safety of life or property is involved, the Commission
may by order provide, for a shorter period of notice.

classes of licenses. Further, the issuance of transitory DTV
licenses in the Fifth Report and Order was part of a process
that modifies broadcasters' underlying permits and licenses in
a way analogous to the modification upheld in Peoples Broad-
casting: at the end of the transition period, broadcasters will
have migrated from one channel to another. While there
admittedly is a difference in kind from the circumstances in
People's Broadcasting, the analog-to-digital transition is limit-
ed to a one-time change.

Hence, what the FCC did in the Fifth Report and Order is
unlike the situation in MCI Telecommunications Corp. v.
AT&T, 512 U.S. 218 (1994), on which the pending applicants
rely. There the Supreme Court held that the FCC's power
to "modify" the requirements of 47 U.S.C. s 203, under which
telecommunications carriers file their rates in a tariff with the
FCC, did not authorize the FCC to do away with tariffs
altogether, and that no deference was due to an interpreta-
tion that went beyond the meaning that the statute could
bear. Id. at 229.7 While the pending applicants contend that
the same reasoning applies here because the FCC's issuance
of an initial DTV license cannot reasonably be said to modify
a broadcaster's existing license, the FCC has not wrought a
fundamental change to the terms of those permits and licens-
es. Broadcasters will begin and end the transition period
broadcasting television programming to the public under very
similar terms. Although the FCC chose not to require 100%
simulcasting on the NTSC and DTV channels throughout the
transition, and Congress disfavored such an approach, see 47
U.S.C. s 336(a)(2), broadcasters will provide essentially the
same services, with some flexibility to provide ancillary ser-
vices as well, under their licenses during the transition. See
Service Reconsideration, 13 F.C.C.R. at 6873-74. Because
the issuance of initial DTV licenses to existing broadcasters
was not clearly the issuance of new "station licenses" under
s 308(a) and because the terms of the DTV licenses can
reasonably be considered modifications of existing licenses,

__________
7 Subsequently, Congress authorized detariffing. See MCI
Worldcom Inc. v. FCC, 209 F.3d 760 (D.C. Cir. 2000).

the FCC could reasonably deem s 308(a) inapplicable and
issue DTV licenses pursuant to s 316.

Finally, the FCC reasonably construed s 336 to allow for
the three-stage process set forth in the Fifth Report and
Order. In the 1996 Act, Congress preempted the ongoing
DTV proceeding only to a limited degree. Section 336 over-
ruled the FCC's decision to include applicants for construc-
tion permits in the pool of broadcasters eligible for a second
channel during the transition period. In most other respects,
Congress left the details of managing the analog-to-digital
transition to the FCC. Nothing in s 336 foreclosed the FCC
from issuing initial DTV licenses on a date certain. More-
over, because Congress limited initial eligibility for DTV
licenses to incumbent broadcasters, the FCC could reason-
ably construe s 336(a)(1)'s reference to "additional licenses
for advanced television services" to encompass a modification
of existing licenses and permits to allow for advanced televi-
sion services in addition to then-existing analog broadcasting
services. Having adopted a paired channel approach, giving
a DTV license to the eligible broadcasters, the FCC's inter-
pretation of its modification power reasonably followed. For
as the FCC explained at oral argument, the two reasons for
requiring the filing of an application for a new license--to
determine who is eligible and how to award licenses in a
competitive proceeding--are inapplicable here: Congress has
defined who is eligible and there is to be no competition.

For these reasons we conclude that in the Fifth Report and
Order the FCC reasonably construed the Communications
Act to allow it to modify existing broadcast licenses and
construction permits to render incumbent broadcasters ini-
tially eligible to provide DTV services consistent with
s 336(a) and pursuant to s 316(a)(1) without having received
written applications for "station licenses" covered by s 308(a).

B. The April 3, 1997, Cut-Off for DTV Eligibility. In
the alternative, the pending applicants contend that even if
the FCC had authority to issue initial DTV licenses in the
Fifth Report and Order without having received written
applications, the FCC unreasonably interpreted s 336 as

requiring it to issue DTV licenses to those eligible under
s 336(a)(1) as of a single date rather than account for those
with equities on their side, such as Pappas Telecasting of
Southern California and Corridor Television who had been
eligible for a second channel prior to the 1996 Act. Further,
they contend that the FCC failed to adequately explain why it
chose not to grant them a second channel.

Our review is limited to whether the FCC acted reasonably
and adequately explained its decision not to grant the pending
applicants a second channel for the transition period. It
clearly did. The FCC left no mystery as to its rationale.
Notwithstanding the pending applicants' equitable arguments
arising out of their disappointment resulting from the 1996
Act, the FCC decided that the spectrum that they sought
would be put to better use by providing it to new full power
broadcasters as well as new and displaced low power televi-
sion (LPTV) and TV translator stations. See SMOOR, 14
F.C.C.R. at 1359-60. The pending applicants have not
shown, in light of s 336, that the date-certain approach was
"patently unreasonable, having no relationship to the underly-
ing regulatory problem." Home Box Office, Inc. v. FCC, 567
F.2d 9, 60 (D.C. Cir. 1977); see also Cassell v. FCC, 154 F.3d
478, 485 (D.C. Cir. 1998). Moreover, the FCC adequately
addressed the equitable concerns of those applicants who
were granted construction permits after April 3, 1997, by
allowing them to convert to DTV on the channel they are
granted and to apply to maximize their service area. See
Service Reconsideration, 13 F.C.C.R. at 6863-66.8 As to the
substance of the FCC's rationale, it is hardly arbitrary and
capricious. The agency reasonably balanced competing de-
mands for spectrum and allowed the pending applicants con-
siderable flexibility in making the transition to DTV.9

__________
8 The FCC's reference in the Fifth Report and Order to
"particular consideration" for those in the pending applicants' posi-
tion did not guarantee any particular result, and certainly did not
obligate the FCC to take steps beyond the careful balancing of
interests reflected in its decision to deny paired channels while
increasing flexibility for analog-to-digital conversions for those in
the pending applicants' position.

 III.

Community Television, Inc. ("Community") and Paxson
Communications Corporation ("Paxson"), each received a sec-
ond channel but contend that their allotment was inadequate
because it does not serve the upgraded service area for which
each had applied. As a matter of policy, the FCC decided
that it would allot DTV channels in a manner to replicate a
broadcaster's existing NTSC service area. See Sixth Further
Notice, 11 F.C.C.R. at 10974-75. In the Sixth Further
Notice, the FCC indicated that "we are proposing to allow
stations to maximize or increase their service area where such
an increase would not create additional interference," id. at
10975; however, the FCC cautioned that allowing such modi-
fications would affect the DTV Table, causing both technical
difficulties and affecting the ability of broadcasters to com-
ment meaningfully on the draft DTV Table. Id. at 10993.

To balance broadcasters' individual interests in increasing
their service areas against the broader interests in establish-
ing a workable DTV Table, the FCC announced in the Sixth
Further Notice that it would "henceforth condition the grant
of applications for modifications of technical facilities, includ-
ing those for applications on file before the date of the
adoption of this Further Notice but granted after that date,

__________
9 Pappas contends further that the FCC arbitrarily failed to
consider its unique circumstances in that it had applied for a
construction permit prior to October 24, 1991 and had presented the
FCC with a motion for leave to supplement its reconsideration
petition to show that a DTV channel was available in its community
of Avalon, California. The FCC did not grant Pappas' motion for
leave and was therefore not obliged to consider its supplement. See
47 C.F.R. s 1.429(d). To the extent that the FCC was obliged to
articulate its reasons for not granting leave, its failure to do so was
harmless. See 5 U.S.C. s 706. In rejecting a very similar conten-
tion raised by another party, the FCC made clear that the availabil-
ity of another channel was immaterial to its discretionary decision
not to award a DTV channel to petitioners. See SMOOR 14
F.C.C.R. at 1358-59.

on the outcome of our final decision on the DTV Table of
Allotments." Id. Commenters complained that those broad-
casters who had applied to upgrade their service prior to July
25, 1996, the date of issuance of the Sixth Further Notice, did
so with the expectation that they would receive corresponding
digital upgrades and that it would be economically infeasible
to invest in an upgrade of analog service only for the transi-
tion period.

The FCC partially accommodated such broadcasters. The
final DTV Table, issued in the Sixth Report and Order,
reflected NTSC upgrades that had been granted in the
interim between the Sixth Further Notice and the Sixth
Report and Order, that is, between July 25, 1996 and April 3,
1997. Applications that had not been acted upon as of April
3, 1997, remained subject to the condition of non-interference
with the DTV Table, and, if granted, would not include a
corresponding digital upgrade. See SMOOR, 14 F.C.C.R. at
1362-63. Community is licensed to operate Channel 57 in
Atlanta, Georgia and had applied to upgrade its NTSC ser-
vice area prior to the adoption of the Sixth Further Notice on
July 25, 1996. Because the FCC did not grant Community's
application until May 1999, Community's DTV channel, Chan-
nel 41, does not replicate its upgraded NTSC service area.
Similarly, Paxson had filed eleven upgrade applications prior
to July 25, 1996, each of which was granted after April 3,
1997, and therefore did not include a corresponding digital
upgrade. Each party may, however, apply for such a digital
upgrade. See 47 C.F.R. s 73.622, 73.623.

Community and Paxson first contend that the FCC's ac-
tions were impermissibly retroactive by subjecting pending
upgrade applications to the compatibility principle. However,
the mere filing of upgrade applications did not vest petition-
ers with a legally cognizable expectation interest. See
Chadmoore Comm., Inc. v. FCC, 113 F.3d 235, 240-41 (D.C.
Cir. 1997). Thus the FCC was free to alter its criteria for
considering those applications. Next, Community and Pax-
son contend, in essence, that the FCC did not try hard
enough to accommodate pending applications during the
course of assembling the DTV Table of Allotments. Neither

party has demonstrated that the FCC's failure to fashion the
DTV Table in a manner that would have granted all upgrade
applications pending on July 25, 1996, was a product of
administrative whim or sloth. On the contrary, the FCC
found that it was not feasible to grant all of the NTSC
modification applications. SMOOR, 14 F.C.C.R. at 1362.

Paxson contends, however, that it is unable to demonstrate
that the FCC acted arbitrarily because the FCC failed to
explain why some upgrade applications were granted while
others were not. It continues, the FCC cannot reasonably
defend its decision to treat those broadcasters whose upgrade
applications were granted after April 3, 1997, differently than
those whose applications were granted before that date with-
out explaining how it decided which applications to grant on
which dates. But the FCC explained that it granted those
applications that were consistent with the DTV Table and
deferred action on those that were not. We presume that the
FCC processed the pending applications with administrative
regularity, for neither Community nor Paxson has identified
any evidence that rebuts that presumption. See, e.g., Louisi-
ana Ass'n of Indep. Producers and Royalty Owners v. FERC,
958 F.2d 1101, 1119 (D.C. Cir. 1992); see also Wilson v.
Hodel, 758 F.2d 1369, 1372-73 (10th Cir. 1985). Further-
more, while both Paxson and Community assert that some
later-filed applications were granted prior to some earlier-
filed applications, there is no indication that administrative
irregularities occurred. Paxson's real complaint is that the
FCC fashioned the DTV Table in such a way that its upgrade
applications were processed more slowly than others. How-
ever, Paxson has not demonstrated why this processing, or
the compromises made in the DTV Table, were arbitrary.

IV.

Minority Television Project ("MTP"), licensee of Channel
32 in San Francisco, California, contends that the FCC's
"service replication" policy unlawfully puts it at a competitive
disadvantage because the policy unnecessarily entrenches the
disparity between VHF and UHF channels. Most analog

UHF stations have smaller service areas than analog VHF
stations, for historical and technical reasons. See Electronic
Indus. Ass'n Consumer Elec. Group v. FCC, 636 F.2d 689,
691-92 (D.C. Cir. 1980). UHF stations are more susceptible
to interference. See id. at 698 n.17. Digital technology
mitigates interference problems on the UHF band. See Sixth
Report and Order, 12 F.C.C.R. at 14603-04. Nonetheless,
under either an analog or digital transmission system, broad-
casting on UHF channels to reach a given audience requires
higher power than broadcasting on VHF channels. The FCC
set power parameters of 50 kW to 1000kW for digital UHF
channels. Id. at 14605. This meant that some UHF channels
would see their service area increased by the minimum power
requirement while other broadcasters, who had an analog
VHF channel but received a digital UHF channel, would see
their service area decreased because of the ceiling on power
that could be used for digital broadcasting on the UHF band.
MTP's analog and digital channels are both in the UHF band.

MTP's contention that the FCC's service-replication policy
arbitrarily entrenches the historical VHF/UHF disparity is in
essence a dispute about a policy decision properly within the
province of the FCC. Initially the FCC had adopted an
approach that would have maximized the service area of each
DTV allotment, an approach favored by MTP, and the FCC
sought comment on this allocation policy. See Sixth Further
Notice, 11 F.C.C.R. at 10974-75. However, the FCC ulti-
mately sided with the numerous broadcasters that preferred
to replicate the status quo to the greatest extent possible.
See Sixth Report and Order, 12 F.C.C.R. at 14605-07. While
MTP is disappointed by the FCC's choice of its service-
replication policy, MTP fails to demonstrate how that choice
was unlawful.

In the alternative, MTP contends that the overall DTV
allotment for San Francisco, and the allotment MTP received
at the minimum UHF power level of 50 kW, are arbitrary
because MTP's DTV channel will not reach the audience
currently served. MTP does not seriously dispute that its
DTV signal will propagate along the same contours as does
its NTSC signal. Rather MTP maintains that its DTV allot-

ment lacks sufficient power to penetrate physical obstacles,
such as buildings and hills, and therefore its DTV channel will
not reach viewers who currently receive its NTSC service.
MTP is further concerned that neighboring allotments will
not allow it to increase its power if necessary. However,
MTP presents no data to demonstrate that the power level of
its allotment is so inadequate as to amount to an arbitrary
departure from the service-replication policy.10

V.

Finally, Pennsylvania Telecasters Association ("PTA") chal-
lenges the FCC's decision to reallocate the spectrum that had
been set aside for Channel 29 in State College, Pennsylvania
without first considering PTA's application to broadcast on
Channel 29. Channel 29 was one of many vacant NTSC
allotments that were deleted in the course of compiling the
DTV Table.

To implement its policy to reconfigure spectrum allotments
to enable broadcasters using one channel to use two, the FCC
needed to identify more than 1900 channels available for
assignment to incumbent broadcasters. See Sixth Further
Notice, 11 F.C.C.R. at 10972. The FCC had issued its Freeze
Order in 1987, recognizing that any transition plan would
require considerable spectrum. Among the vacant channels
covered by the Freeze Order was Channel 29. The FCC had
assigned the channel to State College in 1972 and it had
remained vacant until imposition of the Freeze Order in 1987.
In 1996, the FCC issued its proposed DTV Table in the Sixth
Further Notice and announced that to facilitate finalization of
the DTV Table, it would stop accepting applications for new
NTSC stations as of September 20, 1996. See Sixth Further

__________
10 Moreover, should subsequent events bear out MTP's con-
cerns, the FCC states in its brief on appeal that it retains authority
to make adjustments to mitigate interference problems that may
arise during the analog-to-digital transition. The FCC points out
that it has already demonstrated such flexibility in allowing Moun-
tain Broadcasting Corporation to trade DTV channels with another
station. See supra note 1.

Notice, 11 F.C.C.R. at 10993. The FCC noted further that
"[t]he DTV Table proposed herein was developed on the
assumption that the existing vacant NTSC allotments for
which no construction permit application is pending will be
deleted." Id.

On September 20, 1996, PTA and another would-be broad-
caster petitioned the FCC to waive the application of the
Freeze Order to Channel 29 and to accept their applications
for a construction permit for that channel. When the FCC
issued its final DTV Table in the Sixth Report and Order, the
FCC had reassigned the spectrum allotted for Channel 29 in
State College to DTV channels serving Johnstown, Pennsyl-
vania and Williamsport, Pennsylvania. PTA petitioned for
reconsideration, arguing that the elimination of Channel 29
was contrary to the FCC's commitment to "maintain and
protect those vacant NTSC allotments that are the subject of
pending applications." See Sixth Report and Order, 12
F.C.C.R. at 14639. The FCC denied reconsideration on the
ground that PTA's "application has not been accepted, and we
have not acted on its waiver request. The allotment at issue
was needed and was used for DTV." Allotment Reconsidera-
tion, 13 F.C.C.R. at 7601-02.

PTA's petition for review must be denied because it mis-
construes the FCC's policy. PTA filed its waiver petition and
application for Channel 29 in response to that portion of the
Sixth Further Notice in which the FCC stated that it would
stop accepting applications for vacant analog channels in 30
days and that "we will continue our current policy of consid-
ering requests for waiver of our 1987 freeze Order on a case-
by-case basis." 11 F.C.C.R. at 10992. PTA misread this
statement as a promise to consider new applications for
unused channels in freeze areas. To the contrary, the FCC
promised only that it would consider requests to lift the
freeze on a case-by-case basis, not that it would consider
unused channel applications prior to lifting the freeze. In-
deed, the FCC indicated that applications requiring a lifting
of the freeze would not be accepted for filing unless there was
a public notice to that effect. Id. The FCC ultimately
explained that neither PTA's waiver request nor the applica-

tion had been accepted pursuant to the Freeze Order, and
that elimination of Channel 29 and reallocation of its spec-
trum were necessary to accommodate the DTV Table. Allot-
ment Reconsideration, 13 F.C.C.R. at 7601-02.

The FCC reasonably interpreted its commitment in the
Sixth Report and Order to maintain and protect vacant
NTSC allotments for which applications were pending, 12
F.C.C.R. at 14639, to be limited to applications for vacant
allotments not subject to the Freeze Order or for which a
waiver of the Freeze Order had been granted. Because under
the terms of the Sixth Report and Order PTA's waiver
petition did not constrain the FCC's authority to eliminate
Channel 29, the FCC acted consistently with its stated expec-
tation that "the existing vacant NTSC allotments for which no
construction permit application is pending will be deleted."
Sixth Further Notice, 11 F.C.C.R. at 10993.11

* * * * *

We conclude as we began. The FCC faced a host of
difficult decisions in designing rules for the transition from
analog to digital television broadcasting. After years of work,
a small number of the parties to the proceeding have sought
relief in the court from unfavorable FCC interpretations and
decisions. Even if the compromises reflected in the chal-
lenged FCC decisions were not always Solomonic in their
wisdom, they were not required to be. Given the relevant
statutory directives and regulations, and the competing inter-
ests of the various broadcasters and viewers concerning use
of limited spectrum, the FCC reasonably and permissibly
interpreted its obligations in allocating the valuable public

__________
11 For this reason, PTA's contention based on the Due Process
Clause, U.S. Const. amend V, is without merit; the FCC did not
deprive PTA of a property or liberty interest by deleting Channel
29. Similarly, the FCC did not violate 47 U.S.C. s 307(b), which
directs the FCC to ensure equitable distribution of radio service
among communities, because that section applies to the FCC's
consideration of "applications for licenses," which PTA's waiver
petition was not.

resource that is broadcast spectrum. Accordingly, we deny
the petitions for review.