254 F.3d 226 (D.C. Cir. 2001)
National Public Radio, Inc., et al., Petitionersv.Federal Communications Commission and United States of America, RespondentsCornerstone Community Radio, Inc., et al., Intervenors
No. 00-1246 , 00-1255
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 20, 2001Decided July 3, 2001

On Petitions for Review of an Order of the  Federal Communications Commission
Patrick F. Philbin argued the cause for petitioners.  With  him on the briefs were John F. Wood, Ernest Thomas
Sanchez, Susan M. Jenkins, Neal A. Jackson, Marilyn Mohrman-Gillis and Robert M. Winteringham.
Dennis J. Kelly, Lauren A. Colby and John G. Bentley  were on the brief for intervenors Lay Catholic Broadcasting  Network, Spring Arbor College and Cornerstone Community  Radio, Inc.
Cheryl A. Leanza, Andrew Jay Schwartzman and Harold  J. Feld were on the brief for amicus curiae National Federation of Community Broadcasters.
C. Grey Pash, Jr., Counsel, Federal Communications Commission, argued the cause for respondents.  With him on the  brief were Jane E. Mago, Acting General Counsel, Daniel M.  Armstrong, Associate General Counsel, John M. Nannes,  Acting Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Christopher Sprigman, Attorneys.  Christopher J. Wright, General Counsel, Federal Communications Commission, entered an appearance.
Before:  Ginsburg, Randolph and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Concurring opinion filed by Circuit Judge Randolph.
Tatel, Circuit Judge:


1
The Federal Communications Commission exempts noncommercial educational entities from  participating in auctions for broadcast licenses when they  apply for channels within the portion of the spectrum reserved for them, but not when they apply for channels in the  unreserved spectrum.  In this case, noncommercial educational broadcasters challenge the Commission's policy, arguing that the Balanced Budget Act of 1997 requires the  Commission to exempt them from participating in auctions  for any channel, reserved or unreserved, and that the Commission's adoption of this policy was arbitrary and capricious. Finding the Commission's refusal to exempt such broadcasters from auctions for unreserved channels contrary to the Act's plain language, we vacate the offending portions of the  Commission's order.


2
* For more than fifty years, the Federal Communications  Commission has reserved part of the FM radio spectrum and  several television channels exclusively for noncommercial educational use.  In re Applications of WQED Pittsburgh &  Cornerstone Television, Inc., 15 FCC Rcd 202 p 16 (1999),  vacated in part by 15 FCC Rcd 2534 (2000). The Commission  has done this because of the "high quality type of programming which would be available in such stations--programming of an entirely different character from that available on  most commercial stations."  Id. (internal quotations omitted). Not restricted to this spectrum, however, noncommercial  educational broadcasters (NCEs) may also apply for licenses  in the unreserved spectrum, known as "commercial" licenses.


3
Historically, the Commission allocated licenses for both  reserved and unreserved channels through evidentiary hearings.  Seeking to lessen reliance on these time-consuming  hearings, Congress, acting through the Balanced Budget Act  of 1997, amended Communications Act section 309(j)(1) to  provide that if "mutually exclusive applications are accepted  for any initial license or construction permit, then, except as  provided in paragraph (2), the Commission shall grant the  license or permit to a qualified applicant through a system of  competitive bidding."  Balanced Budget Act of 1997  3002(a)(1)(A), 47 U.S.C. 309(j)(1).  Section 309(j)(2) states  that this competitive bidding authority "shall not apply to  licenses or construction permits issued by the Commission"  for, among other things, NCEs.  47 U.S.C. 309(j)(2)(C)  (cross-referencing id. 397(6)).


4
In an effort to implement the Balanced Budget Act, the  Commission proposed holding auctions for all licenses for  commercial channels, but not for channels reserved for  NCEs.  In re Implementation of Section 309(j) of the Communications Act--Competitive Bidding for Commercial  Broad. & Instructional Television Fixed Serv. Licenses, 12 FCC Rcd 22363 p 50 (proposed Nov. 26, 1997).  The Commission would continue allocating the latter through evidentiary  hearings.  Although NCEs applying for licenses to operate  stations on the part of the spectrum reserved for them would  thus not have to participate in auctions, those applying for  commercial licenses would.  Because commenters disagreed  about whether this approach was consistent with section  309(j)(2), and because the Commission "did not focus on the  complicated nature of this issue in [its] Notice in this proceeding," the Commission solicited a further round of comment. In re Implementation of Section 309(j) of the Communications Act--Competitive Bidding for Commercial Broad. &  Instructional Television Fixed Serv. Licenses, 13 FCC Rcd  15920 p 25 (1998).  In doing so, the Commission recognized  that if section 309(j)(2) barred it from requiring NCEs to  participate in auctions for commercial licenses, several alternatives existed:  establishing a special track for processing  NCE applications;  adopting a hybrid approach when NCEs  apply (for instance, evaluating applicants initially on a point  system and, if the NCE is thereby eliminated, proceeding to  an auction);  or even making NCEs ineligible to apply for  commercial licenses altogether.  In re Reexamination of the  Comparative Standards for Noncommercial Educ. Applicants, 13 FCC Rcd 21167 p p 39-44 (1998).


5
In the resulting Report and Order challenged here, the  Commission answered what it called "[p]erhaps the most  difficult question posed in this proceeding"--how to interpret  section 309(j)(2)--by adopting its initial proposal and exempting NCEs from competing in auctions only when they apply  for licenses to operate channels in the reserved spectrum. See In re Reexamination of the Comparative Standards for  Noncommercial Educ. Applicants, 15 FCC Rcd 7386 p 101  (2000);  see also id. at p p 101-111.  Petitioners--National  Public Radio, the Association of America's Public Television  Stations, the Corporation for Public Broadcasting, and the  State of Oregon (acting on behalf of Southern Oregon University)--seek review of this decision, arguing that it conflicts  with the 1997 Act's NCE exemption and that it is arbitrary  and capricious.

II

6
In evaluating petitioners' argument that the Commission's  action violates the Balanced Budget Act of 1997, we proceed  under the familiar two-part test of Chevron U.S.A. Inc. v.  Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). If "Congress has directly spoken to the precise question at  issue ... that is the end of the matter;  for the court, as well  as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43.  Only if the  statute is silent or ambiguous do we defer to the agency's  interpretation, asking "whether [it] is based on a permissible  construction of the statute."  Id. at 843.


7
Arguing that the Commission's action fails step one, petitioners claim that the Act unambiguously forbids the Commission from requiring NCEs to participate in auctions to  obtain licenses for any channel, reserved or unreserved.  We  agree.  While section 309(j)'s first paragraph directs the  Commission to award licenses through a system of competitive bidding, it only does so subject to limitations set forth in  the second paragraph, one of which expressly denies the  Commission authority to hold auctions for "licenses ... issued ... for [NCEs]."  47 U.S.C. 309(j)(2).  Because this  paragraph's denial of authority is based on the nature of the  station that ultimately receives the license, not on the part of  the spectrum in which the station operates, nothing in the Act  authorizes the Commission to hold auctions for licenses issued  to NCEs to operate in the unreserved spectrum.


8
This is not to say that the Act's language is perfectly  crafted.  For instance, because the exemption refers to the  ultimate recipient of the license, not to applicants for the  license, the Commission apparently has authority to require  an NCE applicant to participate in an auction so long as it  does not ultimately receive a license.  But as petitioners  noted at oral argument, to ensure that an NCE never has to  participate in an auction for a license that it ultimately  receives, the Commission must exempt all NCE applicants  from such auctions.  Inartful drafting is not the same as  ambiguity.  Cf. Meredith v. Fed. Mine Safety & Health Review Comm., 177 F.3d 1042, 1053 (D.C. Cir. 1999) ("[T]he  presence of a difficult question of statutory construction does  not necessarily render that provision ambiguous for purposes  of Chevron.").  Here, the fact remains that under the Act's  plain language the Commission must exempt NCEs from  participating in all auctions.  In any event, the Commission  has not argued that the statute is ambiguous for this reason.


9
Our concurring colleague, advancing another argument not  made by the Commission, believes that the statute is ambiguous for a different reason:  the word "issued" in section  309(j)(2) may mean that the section applies only to licenses  already issued, that is, to renewals of existing licenses.  But  this is not a plausible reading of the statute:  section  309(j)(1)'s grant of bidding authority for licenses is expressly  limited to "initial licenses," not to renewals.  47 U.S.C.  309(j)(1).  Reading 309(j)(2) as exempting only NCE renewals from this authority would thus render the section  meaningless.


10
The Commission argues not that the statute is ambiguous  for any of these reasons, but rather that it is silent on the  specific question before us, thus requiring us to defer to the  Commission's interpretation under Chevron step two. "[N]othing in the text of the provision," the Commission  argues, "evinces unambiguous Congressional intent on the  narrow question of competing applications filed by for a non-reserved channel."  Respondent's Br. at 16;  see  also In re Reexamination of the Comparative Standards for  Noncommercial Educ. Applicants, 15 FCC Rcd p 106.  By  failing to distinguish between reserved and unreserved channels, however, section 309(j)(2) exempts NCEs that apply for  commercial licenses from participating in auctions.  True,  nothing in the Act's text specifically says that NCEs applying  for commercial licences are exempt from auctions.  But general rules need not list everything they cover:  no one would  argue, for instance, that the statutory requirement that the  Commission award licenses to serve "public convenience,  interest, or necessity" does not apply to licenses for AM  stations because the Act does not expressly mention AM  licenses.  47 U.S.C. 307(a).  For the same reason, section 309(j)(2)'s NCE exemption from all auctions means that  NCEs are exempt from auctions for commercial as well as  reserved licenses.


11
Because statutory language represents the clearest indication of Congressional intent, cf. Qi-Zhuo v. Meissner, 70 F.3d  136, 140 (D.C. Cir. 1995) ("Where ... the plain language of  the statute is clear, the court generally will not inquire  further into its meaning."), and because the Act's general  language covers all auctions, we must presume that Congress  meant precisely what it said.  Extremely strong, this presumption is rebuttable only in the "rare cases [in which] the  literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters."  United  States v. Ron Pair Enterp., Inc., 489 U.S. 235, 242 (1989)  (internal quotation omitted).  The Commission's burden in  rebutting the presumption created by clear language is onerous:  the Commission must "show either that, as a matter of  historical fact, Congress did not mean what it appears to have  said, or that, as a matter of logic and statutory structure, it  almost surely could not have meant it."  Engine Mfrs. Ass'n  v. EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996);  see also Griffin  v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982) (courts  may ignore plain language in a narrow category of cases  where "the literal application of a statute will produce a result  demonstrably at odds with the intentions of its drafters."). The Commission here has fallen short of this high standard.


12
The Commission claims that section 309(j)(2) conflicts with  another section of the Act--section 309(j)(1).  Cf. Engine  Mfrs., 88 F.3d at 1089 ("The [agency's] strongest arguments  arise from an apparent tension between two aspects of the  authorization regime.").  According to the Commission, the  latter directs it to award licenses through competitive bidding, while the former prohibits it from doing so.  But we do  not understand how a general rule (section 309(j)(1)) can  conflict with its own exception (section 309(j)(2)).  Nor do we  agree with the Commission that following section 309(j)(2)'s  plain language would frustrate the Act's purposes.  Cf. Envtl.  Def. Fund, Inc. v. EPA, 82 F.3d 451, 469 (D.C. Cir. 1996)("Because [a] literal reading of the statute would actually  frustrate the congressional intent supporting it, we look to  the [agency] for an interpretation of the statute more true to  the Congress's purpose.").  According to the Commission,  exempting NCEs from auctions for commercial licenses would  undermine Congress's desire to "recover[ ] ... a portion of  the value of the [commercial] spectrum" through auctions.  47  U.S.C. 309(j)(3)(C).  But because the Commission would be  required to use auctions when NCEs have not applied, following the plain language of section 309(j)(2) would still increase  the amount of money the Commission recovers.  Most important, notwithstanding Congress's desire to increase revenue,  it expressly exempted NCEs from participating in auctions,  thus demonstrating that it understood that pursuit of this  goal would be limited by the NCE exemption.  "Deciding  what competing values will or will not be sacrificed to the  achievement of a particular objective is the very essence of  legislative choice--and it frustrates rather than effectuates  legislative intent simplistically to assume that whatever furthers the statute's primary objective must be the law."  Rodriguez v. United States, 480 U.S. 522, 526 (1987).


13
Nor, finally, do we find anything in the legislative history to  support the Commission's interpretation of the statute.  In  fact, what little relevant legislative history exists reinforces  section 309(j)(2)'s plain language.  The original House and  Senate bills expressly limited the auction exemption to applications for "channels reserved for noncommercial use."  S. 947, 105th Cong. 3001(a)(1) (1997);  H.R. 2015, 105th  Cong. 3301(a)(1) (1997).  The House-Senate conference  abandoned this restriction, adopting the exemption as it now  stands.  H.R. Conf. Rep. No. 105-217, at 9 (1997).  As  petitioners point out, "[w]here Congress includes limiting  language in an earlier version of a bill but deletes it prior to  enactment, it may be presumed that the limitation was not  intended."  Russello v. United States, 464 U.S. 16, 23-24  (1983).  The Commission offers an alternative explanation for  the deletion:  the restriction was originally used as part of an  attempt to define "NCE" and was removed when the conference substituted a reference to the proper statutory definition.  We need not resolve this debate, for even if the  Commission's account is correct, the legislative history falls  far short of demonstrating that "Congress did not mean what  it appears to have said."  Engine Mfrs., 88 F.3d at 1089.  We  thus have no reason to believe that Congress meant anything  other than that the Commission may not require NCEs to  participate in auctions, regardless of the type of license they  seek.

III

14
Because the Commission's order conflicts with Communications Act section 309(j)(2), we have no need to consider  petitioners' arbitrary and capricious challenge.  The petition  for review is granted and the portions of the Commission's  Report and Order requiring NCEs that apply for licenses on  the unreserved spectrum to participate in competitive auctions are vacated.


15
So ordered.

Randolph, Circuit Judge, concurring:

16
One of the interesting features of a circle is that if you start traveling in one  direction along its rim you will eventually wind up exactly  where you began. The majority opinion starts by declaring  the language of statute "plain." Maj. op. at 2, 6.  Why is it  "plain"?  Because it is "presumed" that Congress meant what  it said.  Id. at 7.  What did Congress say?  Whatever the  language of the statute makes plain.


17
The opinion also observes, rather curiously, that although  the statute has a plain meaning, it is not "perfectly crafted"  and represents "inartful [inartistic?]  drafting."  Maj. op. at  5.  Notice the argument assuming its conclusion.  The statute  is not perfectly crafted, indeed is grammatically incoherent, if  and only if the majority's reading of it is correct, which of  course is the issue.  If the majority is mistaken, as I think it  is, the language of the statute simply conveys what its  authors intended.  There is no flaw in its drafting.


18
Let us now examine the language of 47 U.S.C.  309(j)(2)(C) in the context of the entire subsection:


19
(j) Use of competitive bidding


20
(1) General authority


21
If, consistent with the obligations described in paragraph (6)(E), mutually exclusive applications are accepted for any initial license or construction permit, then, except as provided in paragraph (2), the Commission shall grant the license or permit to a qualified applicant through a system of competitive bidding that meets the requirements of this subsection.


22
(2) Exemptions


23
The competitive bidding authority granted by this subsection shall not apply to licenses or construction permits issued by the Commission(A) for public safety radio services, including private internal radio services used by State and local governments and non-government entities and including emergency road services provided by not-for-profit organizations, that


24
(i) are used to protect the safety of life, health, or property;  and


25
(ii) are not made commercially available to the public;


26
(B) for initial licenses or construction permits for digital television service given to existing terrestrial broadcast licensees to replace their analog television service licenses;  or


27
(C) for stations described in section 397(6) of this title.


28
Section 397(6) defines "noncommercial educational broadcast  station" or, NCE.


29
Attention must be paid to the word "issued" in  309(j)(2)--competitive bidding does not apply to "licenses  or construction permits issued by the Commission" for NCEs. Now if we read this to mean what it says the exemption from  competitive bidding for licenses would apply only to licenses  already "issued."  How can that make sense?  One answer is  that the auction exemption is limited to renewals of licenses  issued to NCEs in the non-reserved spectrum.  In other  words, Congress intended that new licenses may be auctioned  off even if an NCE is vying for the license, but the Commission should not refuse to renew "licenses [already] ... issued" to stations merely because NCEs cannot compete with  commercial applicants in an auction.


30
What does the majority offer in response?  That "issued"  cannot possibly mean what it means, maj. op. at 5-6--an  answer that refutes the majority's next point that "Congress  meant precisely what it said."  Id. at 7.  I do not deny the  feasibility of the majority's interpretation of 309(j)(2)(C)  nor do I deny the possibility of the Commission (not the  court) interpreting the statute in that manner, although it  would be a bit of a stretch.  But to claim that the majority's  reading derives from the "plain meaning" of the provision  crosses the boggle threshold.


31
We ought to just face up to the obvious--this subsection is  a mess. The problem is not just with 309(j)(2)(C).  Look at 309(j)(2)(B)--the "competitive bidding authority granted by  this subsection shall not apply to licenses ... for initial  licenses ... for digital television service...."  47 U.S.C.  309(j)(2)(B).  To what does "licenses for initial licenses"  refer?  When asked at oral argument the Commission was as  baffled as we were.


32
The Commission, at least, did not fall into the trap of  treating the statute as clear when it clearly is not.  See maj.  op. at 8-9;  In re Reexamination of the Comparative Standards for Noncommercial Educational Applicants, 15  F.C.C.R. 7386 p 106 (2000).  The Commission relied instead  on the idea that some conflict existed between the general  rule embodied in 309(j)(1), requiring auctions, and the  exception in 309(j)(2).  I agree with the majority that this  rationale cannot be sustained.  See maj. op. at 8;  In re  Reexamination of the Comparative Standards for Noncommercial Educational Applicants, 15 F.C.C.R. 7386 p 106  (2000). Section 306(j)(2) is an exception;  an exception deviates  from a general rule, it does not "conflict" with it.  Because  the Commission's explanation for its decision is erroneous, we  must remand under SEC v. Chenery, 318 U.S. 80, 88, 95  (1943).


33
I therefore concur that the Commission's order must be set  aside and the case remanded to the agency.  I do not agree  that on remand the Commission must adopt the majority's  interpretation of 309(j)(2)(C).

