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 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 Cases Continued: Page 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. * * * Setting aside their specific critiques of the FCC or- ders at issue here, respondents defense of the court of appeals decision reflects a pervasive failure to accord sufficient weight to the agency s factual findings and policy judgments. See State Farm, 463 U.S. at 43. In advancing the public interest, the Commission may  rely on its judgment, based on experience,  notwith- standing the inconclusiveness of the rulemaking record  particularly when the relevant evidence  is difficult to compile and the potential effects of the rule changes do   not lend themselves to detailed forecast.  NCCB, 436 U.S. at 796-797 (citation omitted); see National Broad. Co. v. United States, 319 U.S. 190, 224 (1943) ( It is not for us to say that the  public interest will be furthered or retarded by the [regulations]. ); WNCN, 450 U.S. at 600. Respondents are of course correct that  no prece- dent provides agencies free rein to premise their pre- dictions on irrational evaluations of past events. Resp. Br. 44. But here, the Commission made rational judg- ments while acknowledging uncertainty on a single public- interest factor that was not the affirmative basis for the rule changes. The APA requires no more. 18 3. In the Reconsideration Order, the FCC adequately explained its reasons for departing from the 2016 Or- der In arguing that the FCC behaved in an arbitrary and capricious manner, respondents assert that the Recon- sideration Order reflects an  unexplained about-face from the 2016 Order. Resp. Br. 42. Respondents char- acterize the 2016 Order as  f[i]nd[ing] that retaining the current rules would foster ownership diversity, and they describe the Reconsideration Order as  f[i]nd[ing], on the same record, that retaining the rules would not help and jettisoning them would do no harm. Id. at 41- 42. Respondents claim of unexplained inconsistency which the court of appeals did not adopt, see Pet. App. 27a rests on a misreading of the 2016 Order. The 2016 Order largely retained the three major ownership rules at issue here: the newspaper/broadcast cross-ownership rule, the radio/television cross-ownership rule, and the local television ownership rule. It did so for the stated purposes of  promot[ing] competition and  viewpoint diversity, and  not with the purpose of preserving or creating specific amounts of minority and female ownership. J.A. 171-172, 293, 310. Respondents emphasize the 2016 Order s statement that the pre-existing ownership rules were  consistent with the Commission s goal to promote minority and fe- male ownership. J.A. 171; see J.A. 293, 310 (similar). Respondents construe that statement as an assertion that the existing ownership rules would affirmatively promote that goal. See Resp. Br. 42. But so long as those ownership rules would not disserve the goal of promoting minority and female ownership, retention of the rules could accurately be described as  consistent 19 with that objective. On that view, the statement is fully consistent with the Reconsideration Order. Respondents also emphasize the 2016 Order s obser- vation that the pre-existing ownership rules  promote[ ] opportunities for diversity. J.A. 172; see J.A. 293, 310 (same). But as the Reconsideration Order explained, this observation  did not indicate a belief that the rule[s] would promote minority and female ownership specifically, but rather that the rule[s] would promote ownership diversity generally by requiring the separa- tion of [media] station ownership. Industry Pet. App. 122a; see id. at 139a-140a, 162a (similar). Respondents contend that this supposed  re- interpretation  blinks reality. Resp. Br. 42. But at a minimum, the Reconsideration Order expressed a rea- sonable understanding of what the 2016 Order was try- ing to convey. In explaining how the ownership rules  promote[ ] opportunities for diversity, the 2016 Order noted that the rules  help[ ] to ensure the presence of independently owned broadcast television stations in the local market, thereby indirectly increasing the like- lihood of a variety of viewpoints and preserving owner- ship opportunities for new entrants. J.A. 172 (local tel- evision ownership rule); see J.A. 293 (newspaper/broadcast cross-ownership rule), 310 (radio/television cross- ownership rule). That explanation focused on a form of ownership diversity i.e., maximizing the number of in- dependent media outlets in a given local market different from minority and female ownership levels. See p. 7, supra (discussing different forms of ownership diversity that the FCC has historically sought to pro- mote). 20 Other portions of the 2016 Order cite evidence sug- gesting that the ownership rules do not materially af- fect minority and female ownership levels. See, e.g., 2016 Order, J.A. 174-175 (finding long-term increase in minority ownership following previous relaxation of lo- cal television ownership rule), J.A. 291-292 ( [W]e find that the record fails to demonstrate that the  modest loosening of the newspaper/broadcast cross-ownership rule  we adopt today [is] likely to result in harm to mi- nority and female ownership. ); see also Pet. App. 27a (majority op.) ( Both the 2016 Report & Order and the Reconsideration Order * * * concluded that the broad- cast ownership rules have minimal effect on female and minority ownership. ) (emphasis added). Indeed, it is unclear on what basis the 2016 Order could have found that the rules affirmatively promote minority and fe- male ownership of broadcast stations. With respect to the general weighing of the competition-related costs and benefits associated with the agency s ownership rules, the Reconsideration Or- der undoubtedly reflected a substantial departure from the 2016 Order. But the agency explained in detail its reasons for concluding that, in light of extensive changes to the media landscape, the ownership rules no longer served the public interest. See Gov t Br. 28-32. The court below did not find that aspect of the FCC s analysis to be deficient. With respect to the specific is- sue of the link (or lack thereof) between the ownership rules and minority and female ownership, the Reconsid- eration Order was neither an  about-face nor  unex- plained. Resp. Br. 42. 21 C. The Court Of Appeals Disrupted The Proper Functioning Of Section 202(h) Reviews The court of appeals analysis is incompatible with the statutory review framework Congress designed. Section 202(h) establishes an iterative process through which the FCC makes frequent assessments of the pub- lic interest, revises its rules accordingly, and then mon- itors the effect of the new rules for possible revision in the next quadrennial review. See Part I.A, supra. By requiring a high degree of certainty concerning poten- tial impacts on minority and female ownership before the Commission can act, the decision below impedes the agency s ability to revise its rules in light of competitive changes in the marketplace and prevents the agency from gathering data to inform future quadrennial re- views. Respondents contend that  any purported  freezing of ownership rules is the Commission s doing, not the Third Circuit s. Resp. Br. 50. Respondents effectively blame the FCC for tinkering with its approach over time rather than  repeal[ing] the ownership rules  en- tirely when Section 202(h) was enacted. Ibid. But the Commission s incremental adaptation to changing mar- ket conditions and prior experience is a virtue, not a vice. See, e.g., Reconsideration Order, Industry Pet. App. 114a ( The Commission s previous attempts to re- lax, rather than repeal,  the rule demonstrate the dif- ficulty in designing an approach that works effectively for the range of market circumstances across the coun- try. ). And there is no doubt that the Third Circuit s rulings have petrified outdated regulations. The blan- ket ban on newspaper/broadcast cross-ownership has remained in place since 1975, despite three separate FCC attempts to repeal it in full or in part. See Gov t 22 Br. 44-45. That broadcast ownership rule adopted 45 years ago cannot plausibly be thought to reflect current market realities. See Prometheus Radio Project v. FCC, 373 F.3d 372, 398 (3d Cir. 2004), as amended (June 3, 2016), cert. denied, 545 U.S. 1123 (2005). Respondents dismiss the Commission s findings on competition with the observation that  [t]he statutory charge is to regulate in the public interest, not the broadcasters competitive interest. Resp. Br. 50. That argument attacks a straw man. Advancing the interests of individual broadcasters is not the Commission s ulti- mate regulatory objective. But Section 202(h) s text and history reflect a clear congressional judgment that competition is a critical consideration in promoting the public interest. See Gov t Br. 4. As the Reconsideration Order explained in painstak- ing detail, the deregulatory changes to the ownership rules if permitted to go into effect are likely to pro- duce broad public benefits. For example, the Commis- sion explained that  eliminating the [newspaper/broadcast cross-ownership rule] will allow both broadcasters and newspapers to seek out new sources of investment and operational expertise, increasing the quantity and qual- ity of local news and information they provide in their local markets. Reconsideration Order, Industry Pet. App. 101a-102a. With respect to the local television ownership rule, the FCC similarly noted that  televi- sion broadcasters important role makes it critical for the Commission to ensure that its rules do not unneces- sarily restrict their ability to serve their local markets in the face of ever-growing video programming op- tions. Id. at 146a. The agency accordingly  adopt[ed] common sense modifications to the rule  that will help local television broadcasters achieve economies of scale 23 and improve their ability to serve their local markets in the face of an evolving video marketplace. Id. at 147a. Although respondents suggest (Br. 50) that the FCC s findings as to competition and localism are  hardly uni- versally accepted, the court below did not cast doubt on those findings, which are supported by a wealth of record evidence. Respondents also fault the Commission for undue delay between quadrennial proceedings. Resp. Br. 50. But that criticism ignores the distorting effect of the court of appeals repeated remands, which have ham- pered the agency s ability to proceed efficiently, includ- ing by requiring it to address regulations other than ownership rules within its Section 202(h) proceedings. See, e.g., Prometheus Radio Project v. FCC, 652 F.3d 431, 472 (3d Cir. 2011) (requiring the Commission to ad- dress the eligible-entity definition  within the course of [its] 2010 Quadrennial Review of its media ownership rules ), cert. denied, 567 U.S. 951 (2012). D. The Court of Appeals Remedy Was Overbroad Although the court of appeals analysis pertained only to discrete aspects of the Reconsideration Order, see Pet. App. 27a, the court invalidated the Reconsider- ation and Incubator Orders in full, as well as the  eligi- ble entity definition from the 2016 Order, id. at 34a. That was error. In defending the court s remedy, respondents spec- ulate that,  [i]f a reasonable assessment of ownership diversity convinces the Commission that tighter owner- ship limits are needed, it would almost certainly like- wise alter the Commission s assessment of how nar- rowly to draw its eligibility criteria for an incubator pro- gram or other ownership limit waivers. Resp. Br. 53. The Third Circuit did not embrace this reasoning, and 24 respondents cite nothing in the Orders indicating that the eligible-entity definition and eligibility criteria are contingent on the reasoning that underlies the ownership- rule changes. Speculation that an agency might wish to do things differently in light of changed circumstances is not a valid basis for vacating lawful agency action. Indeed, respondents fail to identify any basis in the APA to set aside any aspect of the 2016 and Incubator Orders. In particular, the court identified no way in which those Orders were  arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. 706(2)(A). Accordingly, those Orders must stand, regardless of any defects in the Reconsid- eration Order. * * * * * For the foregoing reasons and those stated in the government s opening brief, the judgment of the court of appeals should be reversed. Respectfully submitted. JEFFREY B. WALL Acting Solicitor General JANUARY 2021