Three-Judge Panel Gives Few Hints of Its Incentive Auction Verdict Leanings

A three-judge panel of the U.S. Court of Appeals gave few hints of how it is leaning during oral argument Thursday on NAB and Sinclair’s challenge of the FCC’s incentive auction rules, several attorneys who watched the event told us. Though the judges allowed NAB’s advocate, Gibson Dunn attorney Miguel Estrada, to speak for more than 15 minutes beyond his allotted time with relatively few interruptions, both sides were asked roughly a similar number of questions. The judges didn’t noticeably seem to favor the arguments of either side, several attorneys connected to both sides of the case told us on background. “This is a really hard one to predict from oral argument,” said Jack Goodman, a former NAB attorney who attended the hearing but wasn’t participating. Though each side was allotted 20 minutes, the judges allowed oral argument to go on for an hour and seven minutes.

The question of what Congress meant in the Spectrum Act when it ordered the FCC to use the methodology contained in the Office of Engineering and Technology bulletin 69 was the focus of much of the questioning from Judges Sri Srinivasan and David Sentelle. FCC Associate General Counsel Jacob Lewis argued that congressional intent was to allow the FCC discretion in how it conducted the auction. “The issue is what the methodology is not,” said Lewis, who was cut off by Sentelle. “No, the issue is what it is,” Sentelle said. Estrada said the FCC’s plan to use TVStudy relied on data and inputs so different from the original bulletin that it couldn’t be called the same methodology. Changing all the data used to calculate interference while claiming to follow the same methodology is comparable to claiming to be following a recipe for roast chicken and then frying lamb, Estrada said. However, Sentelle disputed Estrada’s argument that the word “methodology” constrained the FCC’s choice of data points. “Methodology and data points are not the same thing,” Sentelle said. “I don’t like to step back and look at what Congress was doing; I like to step forward and look at the statute and see what Congress actually did,” he said. The judges also questioned NAB’s argument that the Spectrum Act requires the FCC to use 2000 census data in its calculation. “Why would we think that what Congress wanted to do was base the calculations on dramatically outdated population data?” asked Srinivasan.

The judges also took particular interest in whether the congressional directive to take all reasonable efforts to preserve coverage area included the use of digital replacement translators, which are not protected in the auction. Srinivasan and Sentelle asked if the translators boosted the signal within broadcasters’ coverage areas, and whether such translators were licensed separately from stations. Lewis said they are licensed separately, while Sinclair’s advocate, Pillsbury Winthrop attorney John Hane, said they are not. The commission’s repacking plan seems to “morph coverage area and population served” or favor one over the other, Srinivasan said. The NAB previously had agreed that translators weren’t protected under the Spectrum Act, said Hogan Lovells attorney Dominic Perella, speaking on the behalf of intervenors Competitive Carriers Association, CTIA and CEA.

Several of the judges’ questions seemed to indicate that they were unclear on some basic aspects of the incentive auction several attorneys agreed, a situation that attorneys have told us would favor the FCC (see 1503100071) since the law requires the courts to defer to expert federal agencies. Judge Karen Henderson asked Hane if a nonparticipating station in Montana would end up on the same channel after the auction, and Estrada was asked several questions about station contours. The FCC, CTIA and the Expanding Opportunities for Broadcasters Coalition declined comment.