No. 08-1027
`In the Supreme Court of the United States
`
`ALLIANCE FOR COMMUNITY MEDIA, ET AL.,
`PETITIONERS
`v.
`FEDERAL COMMUNICATIONS COMMISSION, ET AL.
`
`ON PETITION FOR A WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE SIXTH CIRCUIT
`
`BRIEF FOR THE FEDERAL RESPONDENTS
`IN OPPOSITION
`
`ELENA KAGAN
`Solicitor General
`Counsel of Record
`Department of Justice
`Washington, D.C. 20530-0001
`(202) 514-2217
`
`P. MICHELE ELLISON
`Acting General Counsel
`JOSEPH R. PALMORE
`Deputy General Counsel
`RICHARD K. WELCH
`Deputy Associate General
`Counsel
`JAMES M. CARR
`Counsel
`Federal Communications
`Commission
`Washington, D.C. 20554
`
`

`
`QUESTIONS PRESENTED
`1. Whether the Federal Communications Commis-
`sion (FCC) has authority to adopt rules interpreting and
`implementing Section 621(a)(1) of the Communications
`Act of 1934, 47 U.S.C. 541(a)(1).
`2. Whether the FCC reasonably construed 47 U.S.C.
`541(a)(1), which provides that a local franchising author-
`ity “may not unreasonably refuse to award an additional
`competitive franchise” for cable television service.
`3. Whether the FCC’s order is supported by sub-
`stantial evidence.
`
`(I)
`
`

`
`TABLE OF CONTENTS
`
` Page
`Opinions below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
`Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
`Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
`Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
`Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
`
`TABLE OF AUTHORITIES
`
`Cases:
`
`Accuracy in Media, Inc. v. FCC, 521 F.2d 288
`(D.C. Cir. 1975), cert. denied, 425 U.S. 934 (1976) . . . . 12
`Alaska Dep’t of Envtl. Conservation v. EPA, 540 U.S.
`461 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
`AT&T v. Iowa Utils. Bd., 525 U.S. 366
`(1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 16, 18
`Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003) . . . . . 15
`Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691
`(1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 19
`Capital Network Sys., Inc. v. FCC, 28 F.3d 201
`(D.C. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
`Cheney R.R. v. ICC, 902 F.2d 66 (D.C. Cir.), cert. de-
`nied, 498 U.S. 985 (1990)
`. . . . . . . . . . . . . . . . . . . . . . . . . 15
`Chevron USA Inc. v. NRDC, 467 U.S. 837 (1984) . . . . . . . . 9
`City of Chicago v. FCC, 199 F.3d 424 (7th Cir. 1999),
`cert. denied, 531 U.S. 825 (2000) . . . . . . . . . . . . . . . . . . . 12
`City of Dallas v. FCC, 165 F.3d 341 (5th Cir. 1999)
`. . 20, 21
`City of New York v. FCC, 486 U.S. 57 (1988) . . 13, 18, 19, 21
`Consolo v. FMC, 383 U.S. 607 (1966) . . . . . . . . . . . . . . . . . . 22
`Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta,
`458 U.S. 141 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
`
`(III)
`
`

`
`IV
`
`Cases—Continued:
`
`Page
`
`General Motors Corp. v. NHTSA, 898 F.2d 165
`(D.C. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
`Global Crossing Telecomms., Inc. v. Metrophones
`Telecomms., Inc., 550 U.S. 45 (2007) . . . . . . . . . . . . 12, 13
`Hodel v. Virginia Surface Mining & Reclamation
`Ass’n, 452 U.S. 264 (1981)
`. . . . . . . . . . . . . . . . . . . . . . . . 19
`INS v. Elias-Zacarias, 502 U.S. 478 (1992) . . . . . . . . . . . . 23
`National Cable Television Ass’n v. FCC, 33 F.3d 66
`(D.C. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
`New York v. United States, 505 U.S. 144 (1992) . . . . . . . . 20
`. . . . . . . . 13, 14
`Orloff v. FCC, 352 F.3d 415 (D.C. Cir. 2003)
`Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81
`(2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
`United States v. Haggar Apparel Co., 526 U.S. 380
`(1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
`United States v. Riverside Bayview Homes, Inc.,
`474 U.S. 121 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
`United States v. Southwestern Cable Co., 392 U.S. 157
`(1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 19
`United Video, Inc. v. FCC, 890 F.2d 1173 (D.C. Cir.
`1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
`Universal Camera Corp. v. NLRB, 340 U.S. 474
`(1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
`Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) . . . . . 19
`
`Constitution, statutes and rule:
`
`U.S. Const.:
`Art. I, § 8, Cl. 3 (Commerce Clause) . . . . . . . . . . . . . . . . 19
`
`

`
`V
`
`Constitution, statutes and rule—Continued:
`
`Page
`
`Amend. V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 19
`Amend. X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
`Cable Communications Policy Act of 1984, Pub. L.
`No. 98-549, 98 Stat. 2780 . . . . . . . . . . . . . . . . . . . . . . . . . . 2
`§ 621(a)(1), 98 Stat. 2786 . . . . . . . . . . . . . . . . . . . . . . . . 3
`Cable Television Consumer Protection and Competi-
`tion Act of 1992, Pub. L. No. 102-385, 106 Stat.
`1460 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
`Communications Act of 1934, 47 U.S.C. 151 et seq. . . . . . . . 2
`47 U.S.C. 152 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
`47 U.S.C. 154(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
`47 U.S.C. 201(b) . . . . . . . . . . . . . . . . . . . . . . . 6, 9, 11, 12, 13
`47 U.S.C. 251 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
`47 U.S.C. 303(r) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 13
`47 U.S.C. 396(g)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
`47 U.S.C. 398(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
`47 U.S.C. 522(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
`47 U.S.C. 522(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
`47 U.S.C. 541 . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12, 20, 21
`. . . . . . . . . . . . . . . . . . . . . . . . . passim
`47 U.S.C. 541(a)(1)
`47 U.S.C. 541(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
`47 U.S.C. 542 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
`47 U.S.C. 555(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 17
`47 U.S.C. 573 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
`47 U.S.C. 573(c)(1)(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
`Family and Medical Leave Act of 1993, Pub. L. No.
`103-3, 107 Stat. 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
`
`

`
`VI
`
`Statutes and rule—Continued:
`
`Page
`
`Telecommunications Act of 1996, Pub. L. No. 104-104,
`§ 101(a), 110 Stat. 61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
`Sup. Ct. R. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
`
`Miscellaneous:
`
`Amendment of Pt. 74, Subpt. K, of the Comm’ns
`Rules & Regulations Relative to Cmty. Antenna
`Television Sys., 36 F.C.C.2d 143 (1972), aff’d,
`ACLU v. FCC, 523 F.2d 1344 (9th Cir. 1975)
`. . . . . . . . . 2
`Jerry Brito & Jerry Ellig, Video Killed the Franchise
`Star: The Consumer Cost of Cable Franchising
`and Proposed Policy Alternatives, 5 J. on
`Telecomm. & High Tech. L. 199 (2006) . . . . . . . . . . . . . . 4
`George S. Ford & Thomas Koutsky, Phoenix Center
`Policy Bulletin No. 13, “In Delay There Is No
`Plenty”: The Consumer Welfare Cost of Franchise
`Reform Delay (Jan. 2006)
`. . . . . . . . . . . . . . . . . . . . . . . . . 4
`H.R. Rep. No. 862, 102d Cong., 2d Sess. (1992) . . . . . . . . . . 3
`Implementation of Sec. 621(a)(1) of the Cable
`Comm’ns Policy Act of 1984 as amended by the
`Cable Television Consumer Prot. & Competition
`Act of 1992, 20 F.C.C.R. 18,581 (2005) . . . . . . . . . . . . . 5
`Implementation of Sec. 3 of the Cable Television Con-
`sumer Prot. & Competition Act of 1992, Report on
`Cable Indus. Prices, 21 F.C.C.R. 15,087 (2006)
`. . . . . . . 4
`S. Rep. No. 92, 102d Cong., 1st Sess. (1991) . . . . . . . . . . . . . 3
`
`

`
`VII
`
`Miscellaneous—Continued:
`
`Page
`
`U.S. General Accounting Office, GAO-04-8, Report to
`the Chairman, Sen. Comm. on Commerce, Science,
`and Transp.: Telecommunications—Issues Re-
`lated to Competition and Subscriber Rates in the
`Cable Television Industry (Oct. 2003) . . . . . . . . . . . . . . . 4
`
`

`
`In the Supreme Court of the United States
`
`No. 08-1027
`ALLIANCE FOR COMMUNITY MEDIA, ET AL.,
`PETITIONERS
`v.
`FEDERAL COMMUNICATIONS COMMISSION, ET AL.
`
`ON PETITION FOR A WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE SIXTH CIRCUIT
`
`BRIEF FOR THE FEDERAL RESPONDENTS
`IN OPPOSITION
`
`OPINIONS BELOW
`The opinion of the court of appeals (Pet. App. 1a-52a)
`is reported at 529 F.3d 763. The order of the Federal
`Communications Commission (Pet. App. 55a-329a) is
`reported at 22 F.C.C.R. 5101.
`JURISDICTION
`The judgment of the court of appeals (Pet. App. 53a-
`54a) was entered on June 27, 2008. A petition for re-
`hearing was denied on October 29, 2008 (Pet. App. 330a-
`331a). On January 21, 2009, Justice Stevens extended
`the time within which to file a petition for a writ of cer-
`tiorari to and including February 10, 2009, and the peti-
`
`(1)
`
`

`
`2
`
`tion was filed on that date. The jurisdiction of this
`Court is invoked under 28 U.S.C. 1254(1).
`STATEMENT
`1. a. The Communications Act of 1934 (Communica-
`tions Act), 47 U.S.C. 151 et seq., gives the Federal Com-
`munications Commission (FCC or Commission) “regula-
`tory power over all forms of electrical communication,
`whether by telephone, telegraph, cable, or radio.” Uni-
`ted States v. Southwestern Cable Co., 392 U.S. 157, 168
`(1968) (citation omitted). That power includes “broad
`authority” to regulate cable television. Id . at 168, 172;
`see Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 701-
`705 (1984).
`Starting in the early 1970s, the Commission regu-
`lated cable operators by requiring them to obtain fed-
`eral certificates of compliance before they could begin
`operations. A cable operator could not qualify for such
`a certificate unless it obtained a state or local franchise
`that complied with standards prescribed by the FCC.
`Amendment of Pt. 74, Subpt. K, of the Comm’n’s Rules
`& Regulations Relative to Cmty. Antenna Television
`Sys., 36 F.C.C.2d 143, 207-208 ¶¶ 177-179 (1972), aff ’d,
`ACLU v. FCC, 523 F.2d 1344 (9th Cir. 1975). That regu-
`latory regime reflected “deliberately structured dual-
`ism,” id . at 207 ¶ 177, in that it provided for “[f]ederal
`regulation of some aspects” of cable television service,
`“with local regulation of others under federal prescrip-
`tion of standards for local jurisdictions,” id. at 204 ¶ 171.
`b. In 1984, Congress enacted the Cable Communica-
`tions Policy Act of 1984 (1984 Cable Act), Pub. L. No.
`98-549, 98 Stat. 2780. The 1984 Cable Act amended
`the Communications Act by adding Title VI, which was
`specifically directed to cable television services. Under
`
`

`
`3
`
`Title VI, a cable operator may not provide cable service
`in a given area without first obtaining a franchise from
`the state or local government. 47 U.S.C. 541(b); see 47
`U.S.C. 522(5) (defining “cable operator”); 47 U.S.C.
`522(6) (defining “cable service”).
`c. As originally enacted, 47 U.S.C. 541(a)(1) stated
`that a local franchising authority (LFA) “may award, in
`accordance with the provisions of this title, 1 or more
`franchises within its jurisdiction.” 1984 Cable Act
`§ 621(a)(1), 98 Stat. 2786. In 1992, as part of the Cable
`Television Consumer Protection and Competition Act of
`1992 (1992 Cable Act), Pub. L. No. 102-385, 106 Stat.
`1460, Congress revised 47 U.S.C. 541(a)(1) to limit the
`power of LFAs to award or deny cable franchises. The
`amended statute provides: “A franchising authority
`may award, in accordance with the provisions of this
`subchapter, 1 or more franchises within its jurisdiction;
`except that a franchising authority may not grant an
`exclusive franchise and may not unreasonably refuse to
`award an additional competitive franchise.” 47 U.S.C.
`541(a)(1). The 1992 Cable Act also amended Section
`541(a)(1) to provide that “[a]ny applicant whose applica-
`tion for a second franchise has been denied by a final
`decision of the franchising authority may appeal
`such final decision” by bringing an action in a state or
`federal court. Ibid.; see 47 U.S.C. 555(a).
`Congress found those changes to be necessary be-
`cause, “[f]or a variety of reasons, including local fran-
`chising requirements,” most cable subscribers had “no
`opportunity to select between competing cable systems.”
`H.R. Rep. No. 862, 102d Cong., 2d Sess. 55 (1992). In
`amending Section 541(a)(1), Congress sought to ensure
`that consumers received the “benefits from competition”
`
`

`
`4
`
`among cable providers. S. Rep. No. 92, 102d Cong., 1st
`Sess. 14 (1991).
`d. More than a decade after the 1992 Cable Act was
`enacted, little progress had been made in the develop-
`ment of meaningful cable competition. In 2003, the Gen-
`eral Accounting Office reported that cable subscribers
`in only “about 2 percent of markets ha[d] the opportu-
`nity to choose between two or more wire-based video
`operators.” U.S. General Accounting Office, GAO-04-8,
`Report to the Chairman, Sen. Comm. on Commerce,
`Science, and Transp.: Telecommunications—Issues
`Related to Competition and Subscriber Rates in the
`Cable Television Industry 9 (Oct. 2003).
`The lack of cable competition harmed consumers.
`Data compiled by the FCC showed that between 1995
`and 2004, average prices for the types of cable packages
`purchased by most consumers rose by more than 90%.
`Implementation of Sec. 3 of the Cable Television Con-
`sumer Prot. & Competition Act of 1992, Report on Cable
`Indus. Prices, 21 F.C.C.R. 15,087, 15,087-15,090 ¶¶ 2, 7,
`10 (2006). In the few communities “where wireline cable
`competition [was] present,” however, cable prices were
`“17 percent lower” than elsewhere. Id . at 15,087 ¶ 2.
`Economists estimated that the persistent delay in the
`development of wireline cable competition was costing
`consumers billions of dollars each year.1
`
`1 George S. Ford & Thomas Koutsky, Phoenix Center Policy Bul-
`letin No. 13, “In Delay There Is No Plenty”: The Consumer Welfare
`Cost of Franchise Reform Delay 1-4, 13 (Jan. 2006) (estimating that,
`nationwide, the consumer welfare cost of one year’s delay in introducing
`cable competition is $8.2 billion); Jerry Brito & Jerry Ellig, Video
`Killed the Franchise Star: The Consumer Cost of Cable Franchising
`and Proposed Policy Alternatives, 5 J. on Telecomm. & High Tech. L.
`199, 227-229 (2006) (estimating the annual cost of delaying nationwide
`
`

`
`5
`
`Evidence suggested that at least some of the annual
`cost of forgone competition was attributable to the
`cable-franchising practices of LFAs. The Commission
`found “indications that in many areas the current opera-
`tion of the local franchising process [was] serving as an
`unreasonable barrier to entry,” either because the pro-
`cess took too long, or because excessive LFA demands
`deterred potential competitors from entering the mar-
`ket. Implementation of Sec. 621(a)(1) of the Cable
`Commc’ns Policy Act of 1984 as amended by the Cable
`Television Consumer Prot. & Competition Act of 1992,
`20 F.C.C.R. 18,581, 18,584 ¶ 5 (2005). The Commission
`therefore initiated a rulemaking to determine whether
`the local franchising process was “hindering the federal
`communications policy objectives of increased competi-
`tion in the delivery of video programming and acceler-
`ated broadband deployment,” and, if so, “whether and
`how” the Commission could “remedy the problem.” Id .
`at 18,587 ¶ 10.
`2. After completing notice-and-comment proce-
`dures, the FCC issued the order that is the subject of
`this case. Pet. App. 55a-281a; see id. at 287a-321a (dis-
`senting statements of Commissioners Copps and Adel-
`stein). Based on its review of a “voluminous record”—
`which included hundreds of “comments filed by new en-
`trants, incumbent cable operators, LFAs, consumer
`groups, and others”—the Commission concluded that
`federal rules were needed to ensure that the operation
`of the local franchising process would not create “an
`unreasonable barrier to entry for potential cable com-
`petitors.” Id. at 77a-78a.
`
`cable competition to be $6.3 billion and listing results of other studies
`estimating annual costs ranging from $7.5 billion to $14 billion).
`
`

`
`6
`
`The Commission invoked its express rulemaking au-
`thority under 47 U.S.C. 201(b), which empowers the
`agency to “prescribe such rules and regulations as may
`be necessary in the public interest to carry out the pro-
`visions of ” the Communications Act. Pet. App. 124a
`(quoting 47 U.S.C. 201(b)). That grant of authority, the
`Commission concluded, “necessarily includes Title VI
`of the Communications Act in general, and Section
`[541(a)(1)] in particular.” Id. at 125a. The Commission
`also noted that other provisions of the Communications
`Act “reinforce the Commission’s general rulemaking
`authority.” Ibid . (citing 47 U.S.C. 152, 154(i), and
`303(r)).
`Having determined that it possessed rulemaking
`authority to interpret and implement Section 541(a)(1),
`the Commission proceeded to promulgate rules to ad-
`dress the most pressing problems in the franchising pro-
`cess. A particularly significant problem was prolonged
`delays that had resulted in unreasonable refusals to
`award competitive cable franchises. Pet. App. 81a-87a,
`141a-142a. Those unreasonable delays had “obstructed
`and, in some cases, completely derailed attempts to de-
`ploy competitive video services.” Id. at 81a. Some pro-
`spective entrants had “walked away from unduly pro-
`longed negotiations” and had abandoned their efforts to
`compete in the cable market. Id. at 86a. “Others [had]
`filed lawsuits seeking a court order compelling the LFA
`to act, which entails additional delay, legal uncertainty,
`and great expense.” Id. at 85a. Many applicants, frus-
`trated by protracted franchise negotiations, had even
`“accepted franchise terms they considered unreasonable
`in order to avoid further delay.” Ibid .
`To eliminate undue delays, the Commission estab-
`lished time limits within which LFAs must render deci-
`
`

`
`7
`
`sions on competitive franchise applications. When a
`company that is already authorized to access public
`rights-of-way (such as a telephone company) submits an
`application for a competitive cable franchise, the LFA
`must grant or deny the application within 90 days. Pet.
`App. 144a-149a. LFAs must act on all other competitive
`franchise applications within six months of their submis-
`sion. Id. at 149a. If an LFA “fails to grant or deny an
`application by the deadline,” it “will be deemed to have
`granted the applicant an interim franchise based on the
`terms proposed in the application.” Id. at 154a-155a.
`That “interim franchise” will “remain in effect only until
`the LFA takes final action on the application.” Id . at
`155a. Thus, an LFA can immediately terminate an in-
`terim franchise simply by denying the pending applica-
`tion. The Commission predicted that interim franchises
`would “be the exception rather than the rule” because
`LFAs would have sufficient time to “either accept or
`reject applications within the applicable time frame.”
`Id. at 158a.
`The Commission also sought to narrow and clari-
`fy the “list of legitimate issues to be negotiated” be-
`tween applicants and LFAs. Pet. App. 148a. The record
`showed that some LFAs were making unreasonable de-
`mands regarding build-out requirements, which prevent
`a competitor from gaining a foothold in a market by fo-
`cusing on serving a smaller, more profitable geographic
`area. Id. at 94a-109a. In other cases, LFAs had made
`unreasonable demands that providers support institu-
`tional networks and public, educational, and governmen-
`tal (PEG) channels. Id. at 113a-115a. The Commission
`also found that some LFAs were trying to assess cable-
`franchise fees in excess of 5% of the franchisee’s gross
`revenues from providing cable service, even though 47
`
`

`
`8
`
`U.S.C. 542 establishes a 5% cap on such fees. Pet. App.
`112a-113a. In addition, the record indicated that some
`LFAs had “made unreasonable demands unrelated to
`the provision of video services,” withholding the grant of
`a competitive cable franchise unless the franchisee
`agreed to requests such as “the purchase of street
`lights,” “the installation of cell phone towers,” construc-
`tion of “a new recreation center and pool,” or “fund[ing]
`a $50,000 scholarship.” Id. at 109a-111a.
`To put an end to such practices, the Commission
`ruled that an LFA would “unreasonably refuse to
`award” a competitive franchise if it declined to grant a
`franchise because of the applicant’s unwillingness to
`accept (1) certain entry-impeding build-out require-
`ments, Pet. App. 159a-168a; (2) demands for payments
`or other contributions that would unlawfully circumvent
`the statutory franchise-fee cap, id. at 169a-187a; (3) de-
`mands for unreasonable undertakings related to PEG
`support and institutional networks, id. at 187a-196a; or
`(4) demands involving non-cable services and facilities,
`id. at 197a-199a. The Commission also provided guid-
`ance to clarify the boundary between reasonable and
`unreasonable LFA demands in those areas. Id. at 166a-
`169a, 173a-187a, 190a-199a.
`The Commission preempted “local laws, regulations,
`practices, and requirements to the extent that: (1) pro-
`visions in those laws, regulations, practices,” or require-
`ments “conflict with the [FCC’s] rules or guidance” for
`implementing Section 541(a)(1); “and (2) such provisions
`are not specifically authorized by state law.” Pet. App.
`200a-201a. At the same time, the Commission declined
`to preempt state-level franchising decisions or state
`laws, concluding that it lacked “a sufficient record to
`evaluate whether and how such state laws may lead to
`
`

`
`9
`
`unreasonable refusals to award additional competitive
`franchises.” Id. at 201a.
`3. Numerous parties filed petitions for review
`of the FCC’s order, and the court of appeals denied
`the petitions. Pet. App. 1a-52a. The court first held
`that the Commission had authority to adopt the rules
`in question. Id. at 17a-25a. The court explained that
`47 U.S.C. 201(b), which contains a grant of general rule-
`making power, gives the FCC “clear jurisdictional au-
`thority to formulate rules and regulations interpreting
`the contours” of Section 541(a)(1). Pet. App. 20a.
`Next, applying the principles set forth in Chevron
`USA Inc. v. NRDC, 467 U.S. 837 (1984), the court of
`appeals concluded that the Commission’s rules were
`based on a permissible interpretation of Section
`541(a)(1). Pet. App. 25a-49a. The court determined that
`the statutory phrase “unreasonably refuse to award”
`was ambiguous, id. at 27a-30a, and that the Commission
`had reasonably construed that ambiguous language,
`id. at 30a-49a. In particular, the court upheld the
`agency’s finding that LFAs “unreasonably refuse to
`award” competitive franchises under Section 541(a)(1)
`when they unduly delay the processing of applications,
`id. at 31a-36a, or when they refuse to grant applications
`unless the applicants submit to unreasonable build-out
`demands, id. at 36a-40a, agree to pay franchise fees in
`excess of the limit set by Section 542, id. at 40a-43a, or
`accept unreasonable PEG obligations, id. at 43a-49a.
`Finally, the court of appeals rejected petitioners’
`claims that the FCC’s rules were arbitrary and capri-
`cious and unsupported by substantial evidence. Pet.
`App. 49a-52a. Citing the “massive record” compiled by
`the agency, the court found “ample record evidence sup-
`porting the Commission’s finding that the operation of
`
`

`
`10
`
`the franchising process had impeded competitive entry
`in multiple ways.” Id. at 50a-51a. The court determined
`that “the Order’s attempt to remedy the problem of un-
`due delay was consistent with the evidence before the
`Commission,” which “created a picture of excessive de-
`lay in the grant of new franchises.” Id. at 51a. Simi-
`larly, the court found “substantial evidence” in the re-
`cord “that build-out requirements were posing signifi-
`cant obstacles to new entrants in providing video and
`broadband services.” Ibid. The court stated in addition
`that “the record demonstrated that LFAs were imposing
`various demands on service providers, including those
`unrelated to cable service, those involving excessive
`franchise fees, and those involving excessive PEG re-
`quirements, that were significantly escalating prospec-
`tive entrants’ costs and thereby deterring entry.” Id. at
`51a-52a. On the basis of its review, the court concluded
`that “the administrative record fully supported the
`agency’s rulemaking.” Id. at 52a.
`ARGUMENT
`Petitioners contend (Pet. 18-38) that the FCC ex-
`ceeded its statutory authority when it adopted rules im-
`plementing Section 541(a)(1), which provides that local
`franchising authorities may not “unreasonably refuse to
`award an additional competitive franchise” for cable
`television service. 47 U.S.C. 541(a)(1). They further
`argue (Pet. 39-40) that the agency’s order is not sup-
`ported by substantial evidence. The court of appeals
`correctly rejected those contentions, and its decision
`does not conflict with any decision of this Court or any
`other court of appeals. Further review is not warranted.
`1. Petitioners argue (Pet. 23-27) that the Commis-
`sion lacked authority to adopt the rules at issue in this
`
`

`
`11
`
`case. That is incorrect. As the court of appeals recog-
`nized, the Commission’s rules represent a permissible
`exercise of its statutory authority to “prescribe such
`rules and regulations as may be necessary in the public
`interest to carry out the provisions of” the Communica-
`tions Act. 47 U.S.C. 201(b); see Pet. App. 17a-25a.
`a. The court of appeals’ resolution of this issue fol-
`lows logically from this Court’s decision in AT&T v.
`Iowa Utilities Bd., 525 U.S. 366 (1999), which explained
`that “the grant in § 201(b) means what it says: The FCC
`has rulemaking authority to carry out the ‘provisions of
`this Act.’ ” Id. at 378 (citation omitted). In AT&T, the
`Court held that Section 201(b) permitted the FCC to
`adopt rules implementing 47 U.S.C. 251 because the
`Telecommunications Act of 1996, Pub. L. No. 104-104,
`§ 101(a), 110 Stat. 61, which included Section 251, “was
`adopted, not as a freestanding enactment, but as an
`amendment to, and hence part of, an Act which said that
`‘[t]he Commission may prescribe such rules and regula-
`tions as may be necessary in the public interest to carry
`out the provisions of this Act.’ ” 525 U.S. at 378 n.5 (ci-
`tation omitted). Similarly, the statutory language at
`issue here was part of an amendment inserted into—and
`thus made part of—the Communications Act. Relying
`on AT&T, the court of appeals correctly reasoned that
`47 U.S.C. 541(a)(1) “qualifies as a ‘provision[] of this Act’
`within the meaning of section 201(b),” and that the FCC
`therefore “possesses clear jurisdictional authority to
`formulate rules and regulations interpreting” that provi-
`sion. Pet. App. 20a.
`Only one other court of appeals—the Seventh Cir-
`cuit—has directly addressed the question whether the
`FCC has authority to interpret and implement Section
`541. Like the court of appeals in this case, that court
`
`

`
`12
`
`rejected the argument that “the FCC was not granted
`regulatory authority over” Section 541. City of Chicago
`v. FCC, 199 F.3d 424, 428 (1999), cert. denied, 531 U.S.
`825 (2000).
`b. Petitioners suggest (Pet. 25-26) that the grant of
`rulemaking authority in Section 201(b) applies only to
`Title II of the Communications Act, which concerns
`common-carrier regulation. They rely on Global Cross-
`ing Telecommunications, Inc. v. Metrophones Telecom-
`munications, Inc., 550 U.S. 45 (2007), which involved a
`portion of Section 201(b) that is expressly limited to
`common carriers, id. at 47-48. Petitioners’ reliance on
`Global Crossing is misplaced because Section 201(b)’s
`grant of rulemaking authority, which is at issue here,
`contains no such limitation.
`Petitioners also rely (Pet. 26-27) on the D.C. Circuit’s
`decision in Accuracy in Media, Inc. v. FCC, 521 F.2d
`288 (1975), cert. denied, 425 U.S. 934 (1976). That
`case did not even mention Section 201(b). Instead, it
`involved the Commission’s authority to regulate the
`Corporation for Public Broadcasting (CPB) under 47
`U.S.C. 396(g)(1)(A). The CPB’s governing statute con-
`tained a provision stating that nothing in the statute
`“shall be deemed * * * to authorize” the FCC “to exer-
`cise any direction, supervision, or control over” the
`CPB, 47 U.S.C. 398(a), and the D.C. Circuit construed
`that provision to bar the FCC from regulating the CPB
`under Section 396(g)(1)(A). Accuracy in Media, 521
`F.2d at 292-297. No such prohibition applies to Section
`541(a)(1).
`c. Even if a question concerning the scope of the
`Commission’s authority under Section 201(b) otherwise
`warranted this Court’s review, this case would be a poor
`vehicle for considering it, because the rules at issue here
`
`

`
`13
`
`do not rest exclusively on that provision. Instead, the
`Commission determined that even apart from Section
`201(b), it possessed rulemaking authority under 47
`U.S.C. 303(r) and under several other statutory provi-
`sions. Pet. App. 125a. This Court has observed that
`Section 303(r) “continues to give the Commission broad
`rulemaking power ‘as may be necessary to carry out the
`provisions of this chapter,’ which includes the body of
`the Cable Act as one of its subchapters.” City of New
`York v. FCC, 486 U.S. 57, 70 n.6 (1988) (citation omit-
`ted); see United Video, Inc. v. FCC, 890 F.2d 1173, 1183
`(D.C. Cir. 1989) (noting that “[t]he Commission’s power
`under § 303(r) is broad” and is sufficient to support reg-
`ulation of syndicated programming on cable systems).
`A ruling in petitioners’ favor on the scope of Section
`201(b) would leave undisturbed the Commission’s inde-
`pendent invocation of authority under Section 303(r).
`2. Petitioners argue (Pet. 28) that the court of ap-
`peals’ decision rests on a “[m]isapplication of Chevron.”
`Even if that were true, a misapplication of the set-
`tled Chevron standard would not warrant this Court’s
`review. See Sup. Ct. R. 10. In any event, petitioners’
`Chevron claim is insubstantial.
`a. In accord with two decisions of the D.C. Circuit,
`the court of appeals correctly determined that the statu-
`tory term “unreasonably” is ambiguous. Pet. App. 28a-
`29a (citing Orloff v. FCC, 352 F.3d 415, 420 (2003), and
`Capital Network Sys., Inc. v. FCC, 28 F.3d 201, 204
`(1994)); see Global Crossing, 550 U.S. at 57-58 (identify-
`ing ambiguity in the Communications Act’s prohibition
`of “unjust or unreasonable” practices). The court of
`appeals therefore appropriately gave “substantial defer-
`ence to the interpretation the Commission accords” that
`term. Pet. App. 29a (quoting Capital Network Sys., 28
`
`

`
`14
`
`F.3d at 204). As the court recognized, “the generality”
`of the term “unreasonably” “opens a rather large area
`for the free play of agency discretion.” Id. at 28a (quot-
`ing Orloff, 352 F.3d at 420).
`To remove any remaining doubt concerning the stat-
`ute’s ambiguity, the court of appeals went on to consider
`the statutory structure and context. Pet. App. 29a-30a.
`In the course of its analysis, the court observed that
`“Congress’s provision of judicial review as a means to
`monitor a given LFA’s compliance with section
`[541(a)(1)] suggests that it is not instantaneously appar-
`ent whether a refusal to grant a prospective franchisee’s
`application is necessarily reasonable or not.” Id. at 30a.
`Contrary to petitioners’ suggestion (Pet. 28), the court
`did not adopt “a per se rule * * * that when Congress
`explicitly provides for court review, it creates a substan-
`tive ‘gap’ that an agency may fill with regulations.” In-
`stead, the court merely cited the judicial-review provi-
`sion to confirm its determination that the term “unrea-
`sonably” is ambiguous.
`b. Petitioners also assert (Pet. 33) that the court of
`appeals “erred at Step Two of Chevron.” After carefully
`examining each of the rules challenged by petitioners,
`the court of appeals correctly held that the FCC’s inter-
`pretation of the ambiguous statutory language was rea-
`sonable. Pet. App. 30a-49a. Petitioners’ case-specific
`challenges to the court’s ruling l