Federal Communications Commission v. Prometheus Radio Project

DEFERENCE GIVEN TO THE FCC

Petitioner FCC argues that it enjoys extensive judicial deference when it comes to regulating media ownership in the public interest. Brief for Petitioner, Federal Communications Commission at 21. The FCC maintains that the Administrative Procedure Act allows courts to set aside agency actions only when those actions are arbitrary and capricious, meaning an agency’s judgment must receive broad deference. Id. at 21–22. The FCC asserts that, because it provided legitimate reasons for promulgating the Reconsideration Order, a court cannot substitute its own judgment for that of the FCC. Id. at 22–23.

The FCC further contends that the Telecommunications Act of 1996 (“the Act”) also gives the FCC broad discretion to regulate—and deregulate—in “the public interest.” Id. at 23, 26. The FCC states that the broad deference that the agency receives is essential to the proper administration of the Act because of the structure of the Act’s review process. Id. The FCC explains that the Act requires the FCC to act upon predictions based on imperfect information because of the changing competitive landscape of the regulated industry. Id. at 24, 26, 44. The FCC argues that the structure of the Act limits any potential consequences of these predictions, since the FCC is required to review its actions ever four years. Id. at 26–27.

Respondent Prometheus Radio Project (“Prometheus”) counters that the Reconsideration Order does not survive the “arbitrary and capricious” level of review. Brief for Respondent, Prometheus Radio Project at 30. Prometheus claims that the FCC relied on the same facts from a previous order but failed to provide reasons for changing its rule when it promulgated the Reconsideration Order. Id. In particular, Prometheus contends that the FCC relied on a 2016 Order that found the “public interest” was served by a strong relationship between minority ownership and minority-focused programming. Id. at 31. Prometheus argues that the FCC failed to provide a reason why its Reconsideration Order found that retaining the ownership rules would no longer promote diversity. Id. at 32. Thus, Prometheus asserts that the lower court was correct to require the FCC to provide a more reasoned explanation for the Reconsideration Order. Id. Further, Prometheus argues that in vacating all of the three FCC orders, the lower court avoided substituting its own policy judgments on how best to regulate in this area, instead ensuring that the FCC could continue to set policy pursuant to Congress’s directive. Id. at 52.

Prometheus likewise argues that the Telecommunications Act of 1996 does not require courts to give the FCC more deference than any other agency. Id. at 48. Prometheus contends that the structure of the Act requires the FCC to look retrospectively to see if a rule is “no longer” in the public interest, so it does not give the FCC leeway to experiment with prospective predictions about female and minority ownership. Id. Prometheus maintains that the four-year review structure does not safeguard against arbitrary and capricious decisions because relaxing ownership requirements will lead to mergers that will be difficult and time-consuming to undo. Id. at 49.

THE IMPORTANCE OF FCC CONSIDERATION OF MINORITY AND FEMALE OWNERSHIP

The FCC argues that it adequately considered all available facts when it fashioned the Reconsideration Order. Brief for Petitioner at 27–28. The FCC contends that it researched the effect of its policy changes on minority and female ownership and concluded that the previous regulations did not substantially protect or promote diverse ownership. Id. at 29. The FCC argues that the previous ownership restrictions were based on an “unsubstantiated hope” that they would be able to promote diverse ownership, and therefore were not worth the cost and inconvenience to traditional networks. Id. at 30. The FCC argues that when the lower court ruled that the FCC’s change in policy was arbitrary and capricious, the court incorrectly weighed the consideration that should be afforded to minority and female ownership. Id. at 33. The FCC claims that the lower court treated one policy factor—diverse ownership—as dispositive for evaluating the public interest implications of a policy change. Id. at 34. The FCC instead claims that its public interest analysis involves many factors and diversity in ownership should be just one of those factors. Id. Furthermore, the FCC argues that data about diversity in ownership is difficult to obtain, so the agency drew its conclusions consistent with the available data. Id. at 37–43. Ultimately, the FCC argues that the lower court incorrectly substituted its own judgment for that of the FCC when it weighed these policy factors. Id. at 36.

Prometheus responds that while the FCC may weigh multiple factors in assessing the “public interest,” the agency erroneously used competition as a dispositive factor without considering effects on diversity in ownership. Brief for Respondent at 27. Prometheus contends that the FCC had an explicit and longstanding goal of maintaining diversity in ownership, so the FCC must “transparently” acknowledge that goal when it rescinds a rule. Id. at 32. Likewise, Prometheus argues that there is no indication that Congress wanted the FCC to consider competition alone when evaluating a new policy. Id. at 30. Rather, Prometheus notes that Congress requires the FCC to prioritize diversity of broadcast ownership in other administrative settings, such as in spectrum auctions. Id. at 28. Prometheus claims that in addition to purporting this goal, Congress expressed no interest in limiting the breadth of the public-interest inquiry when the FCC evaluated new polices. Id. at 29. Rather than weighing legitimate policy goals against one another, Prometheus argues that the FCC’s order relied on a flawed premise that relaxing ownership rules would not decrease diversity in ownership. Id. at 32. Additionally, Prometheus asserts that the FCC had no reason to change its policy based on the available data, because the FCC previously relied on that same factual record to maintain the ownership rule that it seeks to rescind. Id. at 34, 41–42. Prometheus contends that the FCC only needs to more clearly consider how rescinding its rule could affect female and minority ownership. Id. at 54–55.

THE BREADTH OF THE REMEDY ISSUED BY THE THIRD CIRCUIT

The FCC argues that the remedy of vacatur was overbroad because the Court of Appeals only considered the reasoning of the rules pertaining to “ownership rule-changes” in the Reconsideration Order to vacate both the Reconsideration and Incubation Orders and the definition of “eligible entity” in their entirety. Id. at 47–49. Further, the FCC contends that the Court of Appeals impermissibly issued a directive that the agency explain why Commission did not adopt a different definition of “eligible entity” if the agency on remand determines that its proposed definition “will not meaningfully advance ownership diversity.” Id. The FCC explains that nothing under the statutory framework forbids the pursuit of a certain type of broadcast diversity in a regulatory program unless that same program furthers another form of diversity. Id. at 48–49.

Prometheus responds that vacatur was the appropriate remedy due to the error’s seriousness and propensity for “disruptive consequences.” Brief for Respondent at 51. By vacating all three orders, Prometheus contends, the Court avoided making its own policy assessments by breaking up the orders and returning them in part to the FCC. Id. at 52. Prometheus further contends that the orders and definition are interrelated: because the ownership rules and the programs that waive them “must work coherently together,” the Third Circuit was correct to “return the entire regulatory scheme” where there is no “reasoned and transparent analysis” on how it together serves the public interest. Id. at 53.