NAB Challenges Media Bureau Scrutiny of Sharing Arrangements
The NAB challenged the FCC Media Bureau March 12 public notice announcing increased scrutiny of deals involving TV station sharing arrangements and contingent financial interests, in the U.S. Circuit Court of Appeals for the D.C. Circuit, said a petition for review filed Monday (http://bit.ly/1le9sr7). The processing guidelines (CD March 14 p9), issued by the bureau weeks before the commission voted to make joint sales agreements attributable, violate at the Administrative Procedure Act (APA), exceed the bureau’s delegated authority and “constitutes final agency action subject to judicial review,” NAB told the D.C. Circuit. The bureau declined to comment.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The challenge is a serious attack on the bureau’s processing guidelines rather than political posturing, said a broadcast attorney who represents clients involved in sharing arrangements. The petition for review is signed by Gibson Dunn appellate litigator Helgi Walker, who represented Verizon’s successful challenge to the commission’s net neutrality rules. (See separate report above in this issue.) The choice of lawyer is a message that the NAB “means business,” the broadcast attorney said.
The bureau will apply extra scrutiny and weigh the effect on the public interest for deals involving sharing arrangements paired with agreements for one station to guarantee bank loans on another’s behalf, or right of first refusal purchase options, said the public notice (http://fcc.us/1gaJJwk). The guidelines are intended to keep one station in a sharing arrangement from having undue financial influence over its partner, the PN said. This amounts to a “practical prohibition,” said the NAB petition, echoing many broadcast attorneys who described the PN as a message from the FCC not to submit such applications.
The bureau presented the PN as a clarification of existing rules rather than an actual rule change that would require a notice and comment period. The NAB disagreed, saying the guidelines are inconsistent with past commission rules and past approved deals “by rendering previously legitimate transactions presumptively invalid.” NAB contends the rule is final rather than an interim part of the media ownership rules because courts are traditionally reluctant to review agency decisions at an interim stage, said industry attorneys. NAB had asked the FCC to withdraw the PN, setting a deadline for it to be retracted by Thursday (CD May 5 p16). The FCC didn’t respond, said the association.
The FCC will likely defend the rule using the same logic the bureau did in issuing it, said Free Press Policy Counsel Lauren Wilson, who has argued in favor of rules limiting sharing arrangements. “It’s not a final rule; the commission puts out guidance like this all the time.” The bureau always had the power to apply a public interest standard to transactions, though even in the past it hadn’t always done so, she said. “NAB and its members had grown so accustomed to the rubber-stamp process, that it seemed shocking when the agency announced that it was going to do its job to ensure the law is properly enforced.”
Though commissioners Ajit Pai and Mike O'Rielly criticized the PN as an overreach of bureau authority and a violation of the APA when it was issued (CD March 14 p9), the NAB may have a difficult case ahead, said broadcast attorneys. They said courts are generally wary of reversing agency decisions, and the PN’s nebulous nature as opposed to a clear-cut order complicates the matter. The venue could be a bonus for the NAB, as the D.C. Circuit has ruled against the commission on other matters, the attorneys said.
NAB’s challenge may be about more than sharing arrangements, some attorneys said. “We don’t want one person making decisions that have the force of law without the checks and balances of appeals within the commission,” said Pillsbury Winthrop communications attorney John Hane. Wheeler has been perceived as making liberal use of delegated authority (CD March 18 p1), and a court decision in NAB’s favor could curb that, said a broadcast attorney. -- Monty Tayloe (mtayloe@warren-news.com