No. 19-1231
`In the Supreme Court of the United States
`
`
`
`FEDERAL COMMUNICATIONS COMMISSION AND
`UNITED STATES OF AMERICA, PETITIONERS
`v.
`PROMETHEUS RADIO PROJECT, ET AL.
`
`
`
`ON WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`
`REPLY BRIEF FOR THE PETITIONERS
`
`
`
`
`
` JEFFREY B. WALL
`Acting Solicitor General
`Counsel of Record
`Department of Justice
`Washington, D.C. 20530-0001
`SupremeCtBriefs@usdoj.gov
`(202) 514-2217
`
`
`
`
`
`
`
`In the Supreme Court of the United States
`
`
`
`FEDERAL COMMUNICATIONS COMMISSION AND
`UNITED STATES OF AMERICA, PETITIONERS
`v.
`PROMETHEUS RADIO PROJECT, ET AL.
`
`
`
`ON WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`
`REPLY BRIEF FOR THE PETITIONERS
`
`
`
`
`
` JEFFREY B. WALL
`Acting Solicitor General
`Counsel of Record
`Department of Justice
`Washington, D.C. 20530-0001
`SupremeCtBriefs@usdoj.gov
`(202) 514-2217
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`I. The FCC possesses broad discretion to regulate
`media ownership in the public interest ......................... 2
`II. Respondents identify no sound basis for the court
`of appeals’ vacatur of the challenged FCC orders ....... 5
`A. The court of appeals disregarded the statutory
`text .............................................................................. 6
`B. The court of appeals substituted its judgment
`for that of the agency ................................................ 8
`1. The court of appeals ignored relevant
`context .................................................................. 9
`2. The court of appeals’ specific critiques of
`the Commission’s analysis were misplaced .... 11
`3. In the Reconsideration Order, the FCC
`adequately explained its reasons for
`departing from the 2016 Order ....................... 18
`C. The court of appeals disrupted the proper
`functioning of Section 202(h) reviews ................... 21
`D. The court of appeals’ remedy was overbroad....... 23
`
`TABLE OF AUTHORITIES
`
`
`
`Cases:
`Capital Network Sys., Inc. v. FCC, 3 F.3d 1526
`(D.C. Cir. 1993) ................................................................... 12
`FCC v. National Citizens Comm. for Broad.,
`436 U.S. 775 (1978).................................................. 2, 4, 8, 17
`FCC v. WNCN Listeners Guild, 450 U.S. 582 (1981) .... 6, 17
`Massachusetts v. EPA, 549 U.S. 497 (2007) ....................... 12
`Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State
`Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ............. 2, 17
`National Broad. Co. v. United States, 319 U.S. 190
`(1943) .................................................................................... 17
`
`
`
`(I)
`
`
`
`II
`
`Page
`
`Cases—Continued:
`Prometheus Radio Project v. FCC, 373 F.3d 372
`(3d Cir. 2004), as amended (June 3, 2016),
`cert. denied, 545 U.S. 1123 (2005) ..................................... 22
`Prometheus Radio Project v. FCC, 652 F.3d 431
`(3d Cir. 2011), cert. denied, 567 U.S. 951 (2012) .............. 23
`Stilwell v. Office of Thrift Supervision,
`569 F.3d 514 (D.C. Cir. 2009) ............................................... 2
`Vermont Yankee Nuclear Power Corp. v. Natural
`Res. Def. Council, Inc., 435 U.S. 519 (1978) ....................... 6
`
`Statutes:
`Administrative Procedure Act, 5 U.S.C. 701 et seq. ............. 2
`5 U.S.C. 706(2)(A) ............................................................ 24
`Telecommunications Act of 1996, § 202(h),
`47 U.S.C. 303 note ...................................................... passim
`47 U.S.C. 303 ............................................................................ 5
`47 U.S.C. 309(a) ....................................................................... 5
`
`Miscellaneous:
`Expanding the Economic & Innovation Opportuni-
`ties of Spectrum Through Incentive Auctions,
`In re, 29 FCC Rcd 6567 (2014) .......................................... 16
`2002 Biennial Regulatory Review, In re,
`18 FCC Rcd 13,620 (2003) .................................... 7, 8, 12, 13
`2014 Quadrennial Regulatory Review, In re,
`29 FCC Rcd 4371 (2014) ..................................................... 13
`
`
`
`
`
`
`
`In the Supreme Court of the United States
`
`
`
`No. 19-1231
`FEDERAL COMMUNICATIONS COMMISSION AND
`UNITED STATES OF AMERICA, PETITIONERS
`v.
`PROMETHEUS RADIO PROJECT, ET AL.
`
`
`
`ON WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`
`REPLY BRIEF FOR THE PETITIONERS
`
`
`
`
`
`After the Federal Communications Commission
`(FCC or Commission) adopted comprehensive reforms
`of outdated media ownership rules, the court below va-
`cated those reforms solely on the ground that the Com-
`mission had not adequately assessed their anticipated
`effects on ownership by minorities and women. The
`court ordered the FCC on remand to “ascertain on rec-
`ord evidence the likely effect of any rule changes it pro-
`poses * * * on ownership by women and minorities,
`whether through new empirical research or an in-depth
`theoretical analysis.” Pet. App. 34a. That directive is
`untenable. Although the FCC has traditionally treated
`(and continues to treat) minority and female ownership
`as a relevant criterion in its assessment of the public in-
`terest, neither the governing statute nor the Commis-
`sion accords that factor controlling weight. The court’s
`approach was especially unwarranted because the agency
`
`(1)
`
`
`
`2
`
`had adopted the challenged rule changes based on con-
`siderations other than minority and female ownership—
`namely, the changes’ beneficial effects (undisputed here)
`on competition and localism.
`In defending the decision below, respondents decon-
`textualize the FCC’s assessment of minority and female
`ownership, treating it as a motivating factor rather than
`(as the Commission did) as a potential reason for cau-
`tion in reforming the ownership rules. Respondents fly-
`speck the FCC’s evidentiary analysis, pointing to irrel-
`evant materials that the Commission purportedly over-
`looked and ignoring the agency’s cautious approach to a
`complicated question on an imperfect record. And re-
`spondents do not defend the court of appeals’ remand
`instruction. The decision below should be reversed.
`I. THE FCC POSSESSES BROAD DISCRETION TO REGU-
`LATE MEDIA OWNERSHIP IN THE PUBLIC INTEREST
`“The scope of review under the ‘arbitrary and capri-
`cious’ standard is narrow and a court is not to substitute
`its judgment for that of the agency.” Motor Vehicle
`Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto.
`Ins. Co., 463 U.S. 29, 43 (1983). Consistent with that
`principle, this Court has repeatedly affirmed the FCC’s
`broad discretion to regulate in the public interest and to
`make predictive judgments based on imperfect infor-
`mation. See, e.g., FCC v. National Citizens Comm. for
`Broad., 436 U.S. 775 (1978) (NCCB); see also Stilwell v.
`Office of Thrift Supervision, 569 F.3d 514, 519 (D.C.
`Cir. 2009) (Kavanaugh, J.) (“The [Administrative Pro-
`cedure Act, 5 U.S.C. 701 et seq. (APA),] imposes no gen-
`eral obligation on agencies to produce empirical evi-
`dence.”).
`Judicial deference is particularly appropriate when
`the Commission acts pursuant to Section 202(h) of the
`
`
`
`
`3
`
`Telecommunications Act of 1996, 47 U.S.C. 303 note,
`which establishes an “iterative process” through which
`the FCC keeps pace with market developments by tak-
`ing “a fresh look at its rules every four years” and reas-
`sessing “how its rules function in the marketplace.”
`Pet. App. 48a (Scirica, J., concurring in part and dis-
`senting in part). Section 202(h)’s quadrennial-review
`mandate demands predictive judgments based on im-
`perfect information, while mitigating any harmful ef-
`fects of agency policy choices by requiring frequent re-
`appraisal. Gov’t Br. 26-27.
`A. Respondents acknowledge the FCC’s broad stat-
`utory authority and the need for judicial deference to
`the agency’s rational predictive judgments and weigh-
`ing of competing policies. See Resp. Br. 32, 44 (refer-
`ring to these principles as “undisputed” and “uncontro-
`verted”). They dispute the agency’s leeway to make
`predictive judgments under Section 202(h), however,
`arguing that the statute “focus[es] the inquiry on the
`past and present,” not the future. Id. at 48. That claim
`misapprehends the mandate that Section 202(h) im-
`poses.
`To determine whether a particular ownership rule is
`“no longer in the public interest,” 47 U.S.C. 303 note,
`the FCC must assess the rule’s actual and projected im-
`pact under present and future conditions. To be sure,
`historical experience will often be a critical considera-
`tion in determining whether a rule continues to serve
`the public interest and will do so in the future. But when
`changed conditions prevent an ownership rule from con-
`tinuing to serve beneficial purposes, Section 202(h) re-
`quires the agency to repeal or modify the rule accord-
`ingly, even if the rule has advanced the public interest
`
`
`
`
`
`4
`
`in the past. The agency’s analysis under Section 202(h)
`is thus necessarily predictive.
`Respondents also contend that a “wrong call on public-
`interest harm * * * cannot readily be undone even if
`rules are later restored.” Resp. Br. 49. Although re-
`spondents correctly note the FCC’s “entrenched poli-
`cies limiting divestiture,” ibid., the Commission retains
`the authority to order divestiture in cases where prior
`mergers threaten to work serious harm, and it has ex-
`ercised this authority in the past. See, e.g., NCCB, 436
`U.S. at 779 (adopting limited divestiture policy). And to
`the extent a revised rule produces unexpected adverse
`consequences, the Commission can minimize further
`harm by amending the rule prospectively in a subse-
`quent quadrennial review proceeding.
`Ultimately, it is beside the point whether Section
`202(h) supplants “settled judicial review standards”
`with “more lenient scrutiny.” Resp. Br. 48-49. At a min-
`imum, the quadrennial-review scheme is plainly rele-
`vant to determining the level of certainty needed before
`the agency may modify its ownership rules to better
`serve the public interest.
`B. Petitioners in No. 19-1241 (Industry Petitioners)
`also seek to limit the FCC’s statutory discretion, albeit
`in a different manner. In their view, “[b]ecause compet-
`itive findings and judgments are the only ones Congress
`specifically instructed the Commission to make, the
`FCC’s competition analysis required it to modify or re-
`peal the rules it did in the Reconsideration Order.” In-
`dustry Pet. Br. 36 (emphasis altered). Although the
`statute undoubtedly emphasizes competition, Industry
`Petitioners are wrong in suggesting that competition
`must be dispositive in all Section 202(h) proceedings.
`
`
`
`
`
`5
`
`The agency possesses general rulemaking powers to
`regulate in the public interest, see 47 U.S.C. 303; 47
`U.S.C. 309(a), and nothing in Section 202(h) curtails the
`scope of that authority. Section 202(h) requires the
`agency to review its ownership rules quadrennially to
`determine whether they “are necessary in the public in-
`terest as the result of competition,” and to “repeal or
`modify any regulation it determines to be no longer in
`the public interest.” 47 U.S.C. 303 note. That language
`requires the Commission to determine at regular inter-
`vals whether an ownership rule continues to serve the
`public interest in light of changed competitive condi-
`tions. But while the statute identifies competition as a
`criterion the FCC must consider, the agency’s ultimate
`determination whether the rule promotes the public in-
`terest encompasses additional considerations. See
`Gov’t Br. 5.
`II. RESPONDENTS IDENTIFY NO SOUND BASIS FOR THE
`COURT OF APPEALS’ VACATUR OF THE CHALLENGED
`FCC ORDERS
`In the three Orders under review, the FCC carefully
`considered the record evidence, acknowledged gaps in
`the available data, and reached reasonable policy con-
`clusions in light of both the record and the agency’s own
`extensive experience. In the Reconsideration Order,
`Industry Pet. App. 64a-310a, the Commission rationally
`determined that repeal of certain ownership rules could
`produce valuable public benefits, and that the original
`purposes of the repealed rules—preserving competition
`and promoting viewpoint diversity—no longer apply. It
`further concluded that the record evidence did not sug-
`gest that repealing those rules would harm minority
`and female ownership such that the rules should be re-
`tained despite repeal’s competitive benefits. Gov’t Br.
`
`
`
`
`6
`
`28-31. In the 2016 and Incubator Orders, J.A. 101-576,
`577-704, the Commission adopted eligibility criteria de-
`signed to promote the success of new entrants and small
`businesses in broadcast markets, a goal that no party
`denies is in the public interest. Gov’t Br. 32. Respond-
`ents identify no sound basis for the court of appeals’ va-
`catur of those Orders.
`A. The Court Of Appeals Disregarded The Statutory Text
`Section 202(h) reflects the Commission’s authority to
`regulate in the “public interest.” 47 U.S.C. 303 note.
`That language vests the FCC with “broad discretion in
`determining how much weight should be given to” goals
`like racial and gender diversity, “and what policies
`should be pursued in promoting” those goals. FCC v.
`WNCN Listeners Guild, 450 U.S. 582, 600 (1981). The
`court of appeals did not question the reasonableness of
`the FCC’s competition-based affirmative rationales for
`overhauling its ownership rules. The court neverthe-
`less vacated the challenged agency orders and held that
`“[o]n remand the Commission must ascertain on record
`evidence the likely effect of any rule changes it proposes
`* * * on ownership by women and minorities, whether
`through new empirical research or an in-depth theoret-
`ical analysis.” Pet. App. 34a. That holding displaces the
`Commission’s wide-ranging public-interest analysis and
`imposes an extra-statutory obligation in violation of
`Vermont Yankee Nuclear Power Corp. v. Natural Res.
`Def. Council, Inc., 435 U.S. 519 (1978).
`Respondents make no serious effort to defend this
`remand instruction. Instead, they contend that the de-
`cision below permits the Commission to “transparently
`re-weigh competing public-interest considerations,”
`thus “obviating the need for extensive analysis of own-
`
`
`
`
`
`7
`
`ership diversity, should the Commission decide to ex-
`plicitly abandon the goal.” Resp. Br. 55. But the court’s
`opinion says no such thing. Rather, it unambiguously
`directs the Commission to conduct an intensive analysis
`of minority and female ownership as a prerequisite to
`rulemaking. See Pet. App. 34a.
`Respondents assert that the “Commission’s rea-
`soned judgment has been that ownership diversity
`serves the public interest,” both “in its own right, and
`because of its ‘potential to strengthen competition and
`[viewpoint] diversity’ through greater participation by
`small businesses, ‘including those owned by minorities
`and women.’ ” Resp. Br. 31 (quoting In re 2002 Biennial
`Regulatory Review, 18 FCC Rcd 13,620, 13,637 (2003)
`(2002 Review)) (brackets in original). The FCC has long
`recognized that a regulatory policy’s likely impact on
`minority and female ownership may be relevant to the
`agency’s determination whether that policy would serve
`the public interest. It does not follow, however, that the
`agency must generate new data or studies to quantify
`that impact whenever it decides for other reasons that
`regulatory changes are warranted.
`Respondents’ repeated use of the term “ownership
`diversity” also elides the fact that levels of minority and
`female ownership are only one measure of the extent to
`which ownership of broadcast stations is “diverse.” The
`FCC has recognized ownership by small businesses and
`new entrants as another desirable form of ownership di-
`versity. And the agency has historically sought to fos-
`ter, as a salutary form of ownership diversity, the pres-
`ence of multiple independently owned stations in a sin-
`gle market. See, e.g., 2002 Review, 18 FCC Rcd at
`13,637; 2016 Order, J.A. 230-231. Indeed, the long-
`standing ownership rules that the agency sought to
`
`
`
`
`
`8
`
`overhaul in the Reconsideration Order were originally
`adopted to promote that more generalized form of own-
`ership diversity, not to facilitate ownership by any par-
`ticular type of individual or entity. See, e.g., NCCB, 436
`U.S. at 786.
`Respondents similarly exaggerate the relationship
`between minority and female ownership and viewpoint
`diversity. Resp. Br. 31-32. The FCC has traditionally
`focused on ownership diversity writ large—not minor-
`ity and female ownership specifically—as conducive to
`viewpoint diversity. See, e.g., 2002 Review, 18 FCC Rcd
`at 13,630; 2016 Order, J.A. 172 & n.206, 230-231. In the
`2016 Order the Commission noted, in the course of con-
`cluding that any nexus between minority and female
`ownership and viewpoint diversity was insufficient to
`satisfy constitutional requirements for race- or sex-
`based government actions, that “[t]he two recent stud-
`ies that directly address the impact of minority owner-
`ship on viewpoint diversity find almost no statistically
`significant relationship between such ownership and
`their measure of viewpoint diversity.” J.A. 397-398.
`B. The Court Of Appeals Substituted Its Judgment For
`That Of The Agency
`In assessing the likely effect of its rule changes on
`minority and female ownership, the Reconsideration
`Order reached cautious, reasonable conclusions that
`were consistent with the record evidence and with the
`Commission’s own prior conclusions on the subject. The
`court of appeals’ critiques of that analysis lack merit
`and disregard the substantial deference owed to the
`FCC’s predictive judgments. See, e.g., NCCB, 436 U.S.
`at 813-814 (noting that, when the “factual determina-
`tions” “involved in the Commission’s decision * * *
`[a]re primarily of a judgmental or predictive nature,”
`
`
`
`
`9
`
`“complete factual support in the record for the Commis-
`sion’s judgment or prediction is not possible or re-
`quired”). Respondents’ defenses of the decision below
`are similarly unpersuasive.
`1. The court of appeals ignored relevant context
`The Reconsideration Order’s overhaul of the owner-
`ship rules was driven by the FCC’s findings that the
`original rationales for those rules no longer apply, and
`that modifying or repealing those rules would substan-
`tially further competition and localism in the broadcast
`industry. See, e.g., Reconsideration Order, Industry
`Pet. App. 87a (“We affirm the Commission’s longstand-
`ing determination that the [newspaper/broadcast cross-
`ownership] rule does not advance localism and competi-
`tion goals, and find today that it is no longer necessary
`to promote viewpoint diversity.”). The court of appeals
`did not question those findings, which were supported
`by robust analysis and a wealth of data. See Gov’t Br.
`28-30.
`Contrary to respondents’ contention, the Commis-
`sion did not “rely[ ] on the data [pertaining to minority
`and female ownership] to justify relaxing the rules.”
`Resp. Br. 35. Rather, the FCC discussed the Order’s
`potential effect on minority and female ownership only
`in the course of analyzing whether possible adverse im-
`pacts in that regard should dissuade the agency from
`making changes that were otherwise highly beneficial.
`If the agency had believed that revamping the rules
`would likely cause a reduction in minority and/or female
`ownership, it would have had to balance that adverse ef-
`fect against the competitive benefits of the contem-
`plated changes. But the absence of affirmative evidence
`suggesting an adverse impact on minority or female
`ownership obviated the need for any such balancing.
`
`
`
`
`10
`
`Based on that lack of evidence, and taking due account
`of predictive uncertainty and the imperfections of the
`available data, the agency concluded that it could not
`“justify retaining the rule[s] * * * based on the unsub-
`stantiated hope that the rule[s] will promote minority and
`female ownership.” Reconsideration Order, Industry
`Pet. App. 140a; see id. at 122a, 162a (similar).
`The court of appeals misapprehended the Reconsid-
`eration Order’s logic, largely ignoring the Commission’s
`findings on competition and localism and consistently
`overstating the significance of predicted effects on mi-
`nority and female ownership. Respondents repeat that
`error here. See, e.g., Resp. Br. 22 (arguing that the Or-
`der “hinged on a finding that the change would not
`harm the agency’s longstanding goal of fostering own-
`ership diversity”) (emphasis added). Respondents thus
`focus on a single public-interest consideration, without
`attention to the broader context in which the FCC ana-
`lyzed that factor. And they identify nothing in the Re-
`consideration Order suggesting that the Commission
`would have retained the prior ownership rules had it
`reached a different conclusion as to the likely effect of
`repeal on minority and female ownership. Contra id. at
`36.
`Contrary to respondents’ contention, the govern-
`ment does not “seek[ ] to distance itself ” from the FCC’s
`determination that its rule changes would likely “ ‘have
`no material effect on minority and female ownership.’ ”
`Resp. Br. 33-34 (citation omitted). Rather, our point is
`simply that the FCC (a) recognized that the available
`evidence did not definitively resolve the question of
`likely impact on minority and female ownership, and (b)
`decided that the existing ownership rules should be
`overhauled for reasons independent of that impact. See
`
`
`
`
`
`11
`
`Gov’t Br. 38-39. As the FCC explained with respect to
`the newspaper/broadcast cross-ownership rule, “[t]he
`record does not suggest that restricting common owner-
`ship of newspapers and broadcast stations promotes mi-
`nority and female ownership of broadcast stations, and
`there is evidence in the record that tends to support the
`contrary.” Reconsideration Order, Industry Pet. App.
`122a (emphasis added). That characterization of the
`record was eminently reasonable, as was the Commis-
`sion’s decision that modification of the rules would pro-
`duce substantial benefits to competition and localism.
`2. The court of appeals’ specific critiques of the
`Commission’s analysis were misplaced
`The court of appeals accused the FCC of failing to
`set forth data specific to female ownership and of con-
`ducting an insufficiently rigorous analysis of minority
`ownership. Respondents repeat those charges here.
`Resp. Br. 37-40. But the Commission repeatedly solic-
`ited input on this point, and when commenters failed to
`submit meaningful evidence, see Pet. App. 33a, 45a, the
`agency drew reasonable inferences from the available
`data, while acknowledging many of the analytical gaps
`that respondents now highlight. See, e.g., 2016 Order,
`J.A. 215 nn.325-326.
`a. As to female ownership, respondents acknowledge
`the absence of historical data, but contend that “the
`Commission had other options.” Resp. Br. 40. They
`point to a decade-old study that purports to identify an
`inverse relationship between market consolidation and
`minority and female radio-station ownership. But that
`study expressly disclaimed any effort to “examine his-
`torical trends in female and minority radio station own-
`ership.” C.A. App. 502. Respondents also cite (Br. 40)
`a comment letter suggesting that the FCC should study
`
`
`
`
`12
`
`the effects of the repeal and subsequent reinstatement
`of the Failed Station Solicitation Rule, which requires
`certain owners of failed television stations to attempt to
`secure out-of-market buyers for their stations before
`selling to in-market buyers. See C.A. App. 1076; 2002
`Review, 18 FCC Rcd at 13,708. But that rule does not
`directly limit the number of broadcast stations that a
`particular entity may own, and respondents do not ex-
`plain its relevance.
`In any event, there is no legal basis for respondents’
`contention that commenters can effectively require the
`FCC to investigate new rationales for preexisting rules
`before it can repeal those rules. Proposing new ration-
`ales for an old rule that no longer serves its original pur-
`pose is analogous to proposing a new rule. And in that
`context, the burden is plainly on the submitter to offer
`evidence in support of its proposal. See Massachusetts
`v. EPA, 549 U.S. 497, 527-528 (2007); Capital Network
`Sys., Inc. v. FCC, 3 F.3d 1526, 1533 (D.C. Cir. 1993);
`Gov’t Br. 30-31. Rather than dispute this point, re-
`spondents contend that “it is the Commission’s burden
`to determine whether its rules are necessary for the
`public interest.” Resp. Br. 47-48. But the Commission
`did precisely that. Respondents’ real argument is that
`the agency was not allowed to make a public-interest
`determination without first gathering additional data,
`but they identify no source of law suggesting that com-
`menters can hold FCC rulemakings hostage simply by
`identifying purportedly fruitful areas for new research.
`b. With respect to minority ownership, respondents
`criticize (Br. 37-39) the Commission’s analysis of histor-
`ical ownership data. Those data reflect a short-term de-
`crease in minority ownership levels, followed by a long-
`
`
`
`
`
`13
`
`term increase in the number of minority-owned broad-
`cast stations, after certain ownership restrictions were
`relaxed in the late 1990s. See Resp. Br. 37. Respond-
`ents observe that the long-term increase in minority
`ownership after those rule changes does “not disprove
`that relaxation [of ownership restrictions] harms own-
`ership diversity.” Id. at 38. To be sure, the fact that
`minority ownership levels have risen since the prior
`ownership-rule changes were adopted does not elimi-
`nate the possibility that the increase would have been
`even greater if those changes had not been made. But
`the sequence of events described above at least casts
`substantial doubt on respondents’ hypothesis that the
`rule changes systematically suppressed minority own-
`ership.
`Even assuming a causal relationship between the
`ownership rules and minority ownership levels, the
`more natural inference from the temporary dip in mi-
`nority ownership is that the rule changes facilitated vol-
`untary sales by minority owners, without imposing any
`barriers to entry for new minority owners. The Com-
`mission does not have a policy of preventing owners
`from voluntarily leaving the market. See, e.g., In re
`2014 Quadrennial Regulatory Review, 29 FCC Rcd
`4371, 4456 (2014) (2014 Review), J.A. 87 (“Even assum-
`ing that some minority-owned stations would become
`acquisition targets if the rule were loosened, we do not
`believe that such a possibility necessarily would pre-
`clude rule modifications that are otherwise consistent
`with our statutory mandate.”). Rather, the Commis-
`sion’s diversity initiatives have reasonably emphasized
`removing barriers to entry for new station owners, in-
`cluding minority owners. See, e.g., 2002 Review,
`18 FCC Rcd at 13,634-13,635 (focusing on “ ‘provid[ing]
`
`
`
`
`
`14
`
`minorities and women with greater opportunities to en-
`ter the mass media industry’ ” and on “the nature of
`market entry barriers”) (citation omitted). Respond-
`ents do not show that historical changes to the owner-
`ship rules disserved that goal.
`Respondents further contend that “a better analysis
`was in the record,” citing a study purporting to show
`“that the 1990s television rule changes contributed to
`the loss of 40% of the previously minority-owned sta-
`tions.” Resp. Br. 39. That conclusion is both flawed and
`inapposite. The study examined two rule changes: a
`modification of the local television ownership rule and a
`modification of the national television ownership cap.
`C.A. App. 570. The national cap has minimal relevance
`to the Orders at issue in this case, which involve local
`ownership rules. Of the 17 transfers of minority-owned
`stations to non-minority owners that the study identi-
`fies as occurring after the rule changes, 12 would have
`been permitted under the prior version of the local tel-
`evision ownership rule. Ibid. And even with respect to
`the other five sales, the minority owners of the relevant
`stations might have sold to other non-minority buyers if
`the prior version of the rule had remained in effect. Cf.
`2014 Review, J.A. 88 (“[A] station owner that wishes to
`exit the market is not prevented from selling its station
`under the current [newspaper/broadcast cross-ownership]
`ban, which merely eliminates newspaper owners as po-
`tential buyers.”).
`As the study notes, moreover, minority buyers ac-
`quired 26 stations following the rule changes, for a net
`gain in minority ownership. C.A. App. 570 n.37; see Re-
`consideration Order, Industry Pet. App. 120a (“[T]he
`record provides no evidence that minority- and female-
`owned stations will be singled out for acquisition.”).
`
`
`
`
`
`15
`
`The study is thus fully consistent with the hypothesis
`described above: that prior rule changes at most facili-
`tated the voluntary departure of certain minority own-
`ers from the market, without impeding long-term mar-
`ket entry by minority buyers. 1
`In all events, respondents overstate the centrality of
`the historical ownership data to the Commission’s anal-
`ysis. Resp. Br. 43-44. As Judge Scirica recognized be-
`low, “[e]ven if the FCC could obtain improved data on
`these decades-old regulatory changes, that information
`offers only modest predictive value for the conse-
`quences of the FCC’s current rules regarding moderni-
`zation.” Pet. App. 51a (concurring in part and dissent-
`ing in part). Respondents find it “odd” that the govern-
`ment would question the probative force of these data,
`given that “it was the Commission that concluded the
`historical data was probative in the first place.” Resp.
`Br. 45. But the FCC recognized the flaws in those data,
`see 2016 Order, J.A. 215 nn.325-326, and analyzed their
`implications cautiously and out of necessity, see, e.g.,
`Reconsideration Order, Industry Pet. App. 139a (noting
`that the data “suggest that previous relaxations of [cer-
`tain ownership] rules have not resulted in reduced lev-
`els of minority and female ownership”) (emphasis
`added).
`In addition, as respondents acknowledge (Br. 45),
`the historical data did not form the sole basis for the
`Commission’s conclusion as to likely impact on minority
`
`
`1 Respondents also note that the cited study attempted to “cor-
`rect[ ]” the NTIA data, and they argue that the FCC should have
`done the same. Resp. Br. 46-47. But the authors of the study con-
`ceded that their time-intensive, ad hoc efforts—such as “interviews
`with station representatives”—had not produced “a rigorous census
`of all stations.” C.A. App. 568.
`
`
`
`
`
`16
`
`and female ownership. “[T]wo organizations represent-
`ing minority media owners”—including one of the re-
`spondents in this case—“s[ought] relief from the
`[newspaper/broadcast
`cross-ownership]
`rule’s
`re-
`strictions.” Reconsideration Order, Industry Pet. App.
`117a; see id. at 118a (“NABOB has reversed its long-
`held opposition to the elimination of the ban on
`newspaper/radio cross-ownership, arguing that the
`broadcast industry—particularly NABOB’s minority-
`owned member stations—should not be constrained
`from competing for audience share and advertising rev-
`enue.”). The Reconsideration Order also noted com-
`ments suggesting that “some minority media owners
`may be poised to pursue cross-ownership acquisition
`and investment opportunities,” id. at 120a, and ob-
`served that background “constraints of the Local Radio
`Ownership Rule” would help preserve “broadcast ra-
`dio” as “an important entry point into media owner-
`ship,” id. at 138a-139a.
`c. Respondents also advance an argument that the
`court of appeals did not address: that the Commission
`failed to consider the effects of the television “incentive
`auction,” under which broadcasters who voluntarily re-
`linquish their spectrum rights may receive incentive
`payments to make certain portions of the spectrum
`available for new uses. Resp. Br. 40; see In re Expand-
`ing the Economic & Innovation Opportunities of Spec-
`trum Through Incentive Auctions, 29 FCC Rcd 6567,
`6570 (2014). Respondents do not explain how the incen-
`tive auction is relevant to evaluating the effects of the
`ownership rules on minority and female ownership.
`And even assuming that some such causal link could ex-
`ist, the Commission observed that “it is still too soon to
`
`
`
`
`
`17
`
`evaluate [the auction’s] impacts on the television mar-
`ketplace,” though the agency anticipated being able to
`do so “in the forthcoming 2018 Quadrennial Review pro-
`ceeding.” Reconsideration Order, Industry Pet. App.
`164a. The FCC further noted that “the initial results of
`the auction suggest that the auction may not have a sig-
`nificant impact in the context of the Local Television
`Ownership Rule.” Id. at 164a n.248.
`* * *
`Settin
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