FCC Wins Supreme Court Fight For Rule ‘Modernization’

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It’s not an April Fools’ Day joke. ​Still, it arrived months earlier than many had expected.

The U.S. ​Supreme Court, in a 9-0 unanimous decision, has overturned the Third Circuit Court of Appeals’ remand of the FCC’s cross-ownership rule revisions.

A 20-page decision was released Thursday morning.​


It’s a major win for the now-concluded Pai Commission, as the FCC under Republican leadership pressed for a loosening of cross-ownership rules that the present Democratic leadership may not be so willing to move forward with, if left for them to decide.

In an opinion delivered by Associate Justice of the Supreme Court Brett Kavanaugh, the Court looked specifically at the 2017 decision by the Commission to do away with three rules that were no longer necessary to promote competition, localism, or viewpoint diversity.

The Commission further concluded, when erasing those rules, that, Kavanaugh explained, “the record evidence did not suggest that repealing or modifying those three rules was likely to harm minority and female ownership.”

This didn’t stop Prometheus Radio Project and a host of public interest groups from petitioning for review, arguing that the Commission’s decision to repeal or modify the three rules “was arbitrary and capricious” under the Administrative Procedure Act (APA).

Brought before the Philadelphia-based Third Circuit Federal Appeals Court, long considered an obstacle to FCC rule reform, the Court remanded the rules back to the FCC and found that the record did not support the agency’s conclusion that the rule changes would have minimal effect on minority and female ownership.

Left with a choice to appeal all the way to the Supreme Court or stick with the remand and hit the reboot button on rule changes, the Pai Commission chose the former.

It proved to be the winning decision.

Writing for the Court, Kavanaugh said, “The FCC’s decision to repeal or modify the three ownership rules was not arbitrary and capricious for purposes of the APA.”

That single sentence likely brought cheers to many across the broadcast media landscape and at the NAB, which was a co-petitioner with the FCC.

Kavanaugh continued, “In analyzing whether to repeal or modify its existing ownership rules, the FCC considered the record evidence and reasonably concluded that the three
ownership rules at issue were no longer necessary to serve the agency’s public interest goals of competition, localism, and viewpoint diversity, and that the rule changes were not likely to harm minority and female ownership.”

A ruling from the Supreme Court was not expected to arrive until late June, or perhaps July.

And, it arrives following an 82-minute hearing of oral arguments in FCC v. Prometheus Radio Project held on January 19, 2021. The key takeaway from that session? Several justices seemed confused by what they were being asked to judge, with the Justice Department’s Deputy Solicitor General serving as the FCC’s counsel on the hot seat.

For the court, the key topic of conversation and consideration during Oral Arguments was whether or not the impact, if any, on minority and/or female ownership of broadcast media stations is taken into account as a requirement when considering an asset purchase agreement. As the Commission is devoted to localism and diversity of viewpoints — a view shared by the NAB — the quick answer is no, not as a requirement.

While Malcom Stewart, who served as the Commission’s presenting legal representative in the virtual session, was addressed by several Justices, the legal counsel for Prometheus, Ruthanne Mary Deutsch, was subject to persistent questioning by Chief Justice Roberts. He wanted answers to questions on cross-ownership rules and ownership diversity of minorities and women. Where they two different things, and if not, why?

Following Oral Arguments, it appears Roberts’ questioning was a premonition for how he’d rule. The fact that every Justice sided with the FCC may be a surprise to some.

In Kavanaugh’s words, in challenging the FCC’s order, Prometheus argues that the Commission’s assessment of the likely impact of the rule changes on minority and female ownership rested on flawed data. But, he wrote, “the FCC acknowledged the gaps in the data sets it relied on, and noted that, despite its repeated requests for additional data, it had received no countervailing evidence suggesting that changing the three ownership
rules was likely to harm minority and female ownership.”

He also addressed how Prometheus asserted that the FCC ignored two studies submitted by a commenter that purported to show that past relaxations of the ownership rules had led to decreases in minority and female ownership levels.

Kavanaugh’s response: “the record demonstrates that the FCC considered those studies
and simply interpreted them differently.”

He continued, “In assessing the effects of the rule changes on minority and female ownership, the FCC did not have perfect empirical or statistical data. But that is not unusual in day-to-day agency decisionmaking within the Executive Branch. The APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies. And nothing in the Telecommunications Act requires the FCC to conduct such studies before exercising its discretion under Section 202(h).”

Thus, the Justices unanimously found, “In light of the sparse record on minority and female ownership and the FCC’s findings with respect to competition, localism, and viewpoint diversity, the Court cannot say that the agency’s decision to repeal or modify the ownership rules fell outside the zone of reasonableness for purposes of the APA.”

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