SCOTUS Rules for FCC 9-0 on 'Prometheus'

It's “a resounding victory for NAB, no question about that,” said NAB attorney Helgi Walker of Gibson Dunn in an interview. The decision explicitly affirms that courts must defer to the FCC -- currently controlled by acting Chairwoman Jessica Rosenworcel, a media consolidation opponent. That deference also applies to future ownership regulations, such as the pending 2018 QR, said Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman. The narrow SCOTUS decision, reversing the 3rd Circuit’s ruling on APA grounds without addressing other arguments, likely means the ultimate outcome for future such FCC reviews is “more court,” said University of Minnesota School of Journalism assistant professor-media law Christopher Terry.

“While I am disappointed by the Court’s decision, the values that have long upheld our media policies -- competition, localism, and diversity -- remain strong," said Rosenworcel. “I am committed to ensuring that these principles guide this agency as we move forward.” The FCC “must now embrace the modern approach to media regulation vindicated by the Court and, in the context of our current quadrennial review proceeding, ensure that our remaining broadcast ownership rules reflect the realities of the marketplace,” said Commissioner Brendan Carr.

The FCC didn’t violate the APA by relying on the data it had as a basis for relaxing the eight-voices per market test of allowing one company to own more than the normal number of stations, the newspaper cross-ownership rule and the radio/TV cross-ownership rule, wrote Kavanaugh. The FCC’s “best estimate,” based on “sparse record evidence” was that relaxing the ownership rules was unlikely “to harm minority and female ownership,” Kavanaugh wrote. “The APA requires no more.”

Justice Clarence Thomas wrote a solo concurring opinion arguing that the FCC isn’t required at all to consider ownership diversity when making a decision: “The Third Circuit had no authority to require the FCC to consider minority and female ownership. So in future reviews, the FCC is under no obligation to do so.”

The SCOTUS opinion undoes the 3rd Circuit’s ruling, and re-eliminates the newspaper/broadcast cross-ownership rule and the eight-voices test, attorneys said. It restores the FCC definition of an eligible entity and the radio incubator program. The agency should “immediately reinstate the broadcast incubator program in order to help promote new entry and ownership diversity in the broadcast radio industry,” Carr said.

APA

With the case's focus on the APA, the decision didn't get to more substantive policy matters. Courts generally try to avoid such wider reviews, attorneys have said.

The ruling “falls in line with prior court decisions” on agency deference under the APA and “signals that the FCC in the future will have broad discretion to enact substantive media ownership rules,” said Common Cause Special Adviser Michael Copps. Rosenworcel was part of Copps' staff when he was a commissioner. “We are confident that the FCC under the current administration will act quickly to develop strong media ownership rules,” said Copps. The court’s ruling affirmed that the agency should get the deference that's normal for federal agencies but didn’t go as far as requested by the solicitor general, who argued the FCC should get even more lenient consideration, said Walker. That’s a victory for broadcasters, she said.

Broadcasters have long complained that Prometheus cases kept getting assigned to the same 3rd Circuit panel of judges, and the SCOTUS ruling has likely put an end to that, several attorneys said. The 3rd Circuit can’t claim jurisdiction on remand if there’s no remand, Walker said.

The high court decision to take the case and its unanimous opinion “are a strong indication that the Court wanted to bring some clarity and finality to this area of the law after 17 years of litigation,” said Tom Johnson, the FCC general counsel when SCOTUS accepted the case. There will likely be a venue fight in future QR cases, but it’s extremely unlikely to end up in front of the same panel if it goes before the 3rd Circuit, several attorneys said.

That's a victory for broadcasters, said Robert Folliard, Gray Television senior vice president-government relations and distribution. “It is not the job of two judges to play FCC.” The three judge 3rd Circuit panels' prior Prometheus rulings have all been 2-1 decisions against the FCC.

2-2 FCC

Any FCC response now is unlikely to be swift, said attorneys on both sides of the matter. Tied at 2-2, the agency probably wouldn’t act on a QR until another commissioner is appointed, said broadcast attorney Jack Goodman, who represented broadcasters in the case. “As soon as it gets a working majority, the Biden FCC will be able to take action,” said United Church of Christ attorney Cheryl Leanza, who represented the Prometheus petitioners before the 3rd Circuit.

A long series of FCC chairs of all parties have dragged their feet on QR orders, observed Terry. Any action on the review or to bring back the eliminated orders would require establishing new record and almost certainly trigger a court challenge from one side or the other, said Folliard. “I would be very surprised if the FCC were to try to reinstate the eight-voices test and the newspaper cross-ownership rule.” SCOTUS “unanimously affirmed that the FCC may follow the data before it in deciding whether to maintain, modify, or eliminate its media ownership rules,” emailed ACA Connects Senior Vice President-Policy Affairs Ross Lieberman. “This means that the new FCC may make up its own mind about the media ownership rules.” He added that ACA plans to make the case for tougher broadcast ownership rules.

​​​​​​​Broadcast attorneys and broadcasters don’t expect a wave of resulting deal-making. The ownership rule and the eight-voices test are somewhat situational, and the rule barring same market top four combinations remains in place, Goodman said. Proposed combinations would also have to make it through the Democratic-controlled FCC, lawyers noted.

​​​​​​​The court's decision "puts an end to the years-long analysis paralysis over media ownership regulation in the lower courts," emailed Free State Foundation Director-Policy Studies Seth Cooper. “Thanks to deregulatory decisions by the [Donald] Trump Administration, local newspapers and local broadcast stations can now be jointly owned in every market in the United States,” said Public Knowledge Senior Vice President Harold Feld. “It is critical that the Commission continue to examine its media ownership rules to ensure that America’s broadcasters are able to compete,” said NAB CEO Gordon Smith.