FCC Seen Starting From Behind in 'Prometheus IV' 3rd Circuit Argument Tuesday

Courts are generally reluctant to impose their will on regulators, said DePauw University media professor Jeffrey McCall. “You never know,” said Georgetown University Law Center Institute for Public Representation's Andrew Schwartzman, who represents Prometheus Radio Project in the case.

Arguments will take place before the same panel of judges who handed the FCC three previous losses in the three previous Prometheus cases. The case against the 2010 and 2014 quadrennial reviews and subsequent reconsideration order resurrects concepts the court has previously ruled against, such as the FCC’s eligible entity standard. “Rarely does a trilogy benefit from a sequel,” said Judge Thomas Ambro in the last lines of the Prometheus III majority opinion.

Relatively quick scheduling of oral argument could suggest the 3rd Circuit is eager to take up the matter -- a likely boon to petitioners -- or it could mean the court wants the long dragging matter off its plate, attorneys said. Some said it's a disadvantage petitioners must divvy up their arguing time, but others said the panel -- Judges Julio Fuentes and Anthony Scirica, along with Ambro -- will likely be generous with time Tuesday. The three are known as “a hot panel” and seen likely to pepper the attorneys with questions.

The main body of petitioners challenging ownership rules -- the petitioners allotted the most time to argue Tuesday -- is made up of Prometheus, Common Cause, Free Press and similar anticonsolidation groups. Changes to ownership rules in 2010 and 2014 QRs and subsequent media ownership recon order didn’t satisfy the court’s requirements the agency collect data on how such changes would affect ownership diversity, they say. The agency’s current definition of an eligible entity “will assist four people who are not women or ethnic minorities for each person who is,” the petitioners said in a brief.

The anticonsolidation groups want the recon order vacated, the incubator order remanded, a ban on changing ownership rules without data collection, and a special master appointed to ensure the FCC complies with the court’s orders. It’s not clear that it would be legal for the court to impose some of those requirements, a broadcast attorney said. The three-judge panel asking detailed questions about vacating the rules could signal sympathy toward those groups’ argument, a broadcast lawyer said.

The anticonsolidation groups’ arguments are similar to their objections in previous Prometheus cases, but what makes this go-round different is the radio incubator program, FCC General Counsel Tom Johnson told us at a Media Institute event last month (see 1905150060). The incubator is concrete action to help increase ownership diversity, Johnson said. The FCC carefully considered the impact of ownership rule changes and used “reasonable judgment” changes to the competitive marketplace supported them, said the FCC in a brief. “The Commission carefully considered the potential effect of each of its rules on minority and female ownership and found no material impact.”

The incubator program could provide a reason for the court to give the FCC more time, said Fletcher Heald appellate attorney Harry Cole. Since the program hasn’t started, the judges could kick the can down the road until data’s available about its effectiveness, broadcast attorneys suggested. The FCC’s repeated failure to satisfy the 3rd Circuit’s requests for diversity data suggest the court would be unlikely to trust the agency to provide evidence down the road, said University of Minnesota School of Journalism assistant professor-media law Christopher Terry.

Petitioners National Association of Black Owned Broadcasters and Multicultural Media, Telecom and Internet Council’s challenge to the rules is also focused on the incubator program. Provisions in the program that would allow a broadcaster incubating a new entrant in a small market to buy additional stations in much larger markets will undermine the program’s stated purpose, the groups said. They argue the FCC failed to follow the court’s previous direction by not taking up until the 2018 QR a proposal to apply cable procurement diversity rules to broadcasting. The incubator program is a rehash of previous and unsuccessful FCC attempts to satisfy the court with the eligible entity standard, said Terry.

The standing of the anticonsolidation groups and the diversity petitioners was challenged by intervenors on the side of the FCC -- such as NAB -- though not by the agency itself. The groups aren’t regulated by the media ownership rules, and didn’t initially include filings demonstrating their standing, the intervenors argued (see 1904230018). If the 3rd Circuit panel takes a lot of interest in the standing issue Tuesday, it could be a sign they see it as a legitimate concern, attorneys said. A challenge to restoring the UHF discount in the D.C. Circuit involving many of the same petitioner groups was dismissed for lack of standing (see 1807250002).

The final group of petitioners -- the Independent Television Group -- is made up of broadcasters such as Morgan Murphy Media and Quincy Media arguing that the FCC should have used its media ownership recon order to eliminate the prohibition on commonly owned top-four stations in the same market instead of instituting a case-by-case review. The agency didn’t adequately show why competition broadcasters face from other media sources justified eliminating the eight-voices test but leaving the top-four rule, said the broadcasters. Attorneys said it's possible for the court to rule in favor of one group of petitioners and reject others, but one noted the court is unlikely to endorse both the anticonsolidation group argument that all changes to ownership rules have been invalid and the ITG’s argument they haven’t gone far enough.

It’s possible the broadcasters could win in an unexpected way, if the court is sufficiently frustrated with the FCC, Terry said. In the Prometheus III opinion, Ambro had said calls for the court to wipe away all of the commission’s broadcast rules over its delayed action were comparable to “burning down the house to roast the pig.” He said such a remedy “might be justified in the future if the Commission does not act quickly to carry out its legislative mandate.” The 3rd Circuit isn’t seen as a court opposed to regulation, making such an outcome unlikely,.

After Tuesday’s argument, it’s likely to take months for the judges to issue a decision. The FCC’s unlikely to wait for that decision to act on a rulemaking on the 2018 QR, said Garvey Schubert broadcast lawyer Melodie Virtue. The agency isn't known for pausing rulemaking just because one is under review, she said.