SCOTUS Backs FCC in FCC v. Prometheus Radio Project

In FCC v. Prometheus Radio Project, 592 U. S. ____ (2021), the U.S. Supreme Court held that the Federal Communications Commission’s (FFC) 2017 decision to repeal or modify three of its media ownership rules was not arbitrary or capricious under the Administrative Procedure Act (APA). The Court’s decision was unanimous.

Facts of the Case

Under its broad authority to regulate broadcast media in the public interest, the FCC has long maintained several ownership rules that limit the number of radio stations, television stations, and newspapers that a single entity may own in a given market. Section 202(h) of the Telecommunications Act of 1996 directs the FCC to review its media ownership rules every four years and to repeal or modify any rules that no longer serve the public interest.

In 2017, the FCC concluded that three of its ownership rules were no longer necessary to promote competition, localism, or viewpoint diversity. It further concluded that the record evidence did not suggest that repealing or modifying those three rules was likely to harm minority and female ownership. Based on that analysis, the agency decided to repeal two of those three ownership rules and modify the third. Prometheus Radio Project and several other public interest and consumer advocacy groups (collectively, Prometheus) petitioned for review, arguing that the FCC’s decision to repeal or modify the three rules was arbitrary and capricious under APA. The Third Circuit Court of Appeals vacated the FCC’s reconsideration order, holding that the record did not support the agency’s conclusion that the rule changes would have minimal effect on minority and female ownership.

Supreme Court’s Decision

The Supreme Court unanimously reversed. “[W]e conclude that the FCC’s 2017 order was reasonable and reasonably explained for purposes of the APA’s deferential arbitrary-and-capricious standard. We therefore reverse the judgment of the Third Circuit,” Justice Brett Kavanaugh wrote on behalf of the Court.

In finding that the FCC decision was neither arbitrary nor capricious for purposes of the APA, the Court noted that in conducting its public interest analysis under Section 202(h), the FCC considered the effects of the rules on competition, localism, viewpoint diversity, and minority and female ownership of broadcast media outlets. The FCC also concluded that the three rules were no longer necessary to promote competition, localism, and viewpoint diversity, and that changing the rules was not likely to harm minority and female ownership. Justice Kavanaugh wrote:

The FCC’s analysis was reasonable and reasonably explained for purposes of the APA’s deferential arbitrary-and-capricious standard. The FCC considered the record evidence on competition, localism, viewpoint diversity, and minority and female ownership, and

reasonably concluded that the three ownership rules no longer serve the public interest. The FCC reasoned that the historical justifications for those ownership rules no longer apply in today’s media market, and that permitting efficient combinations among radio stations, television stations, and news- papers would benefit consumers. The Commission further explained that its best estimate, based on the sparse record evidence, was that repealing or modifying the three rules at issue here was not likely to harm minority and female ownership. The APA requires no more.

The Court rejected Prometheus’ arguments that the FCC’s assessment of the likely impact of the rule changes on minority and female ownership rested on flawed data. The Court emphasized that 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. The Court also noted that the APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies. Additionally, nothing in the Telecommunications Act requires the FCC to conduct such studies before exercising its discretion under Section 202(h).

“The FCC repeatedly asked commenters to submit empirical or statistical studies on the relationship between the ownership rules and minority and female ownership,” Justice Kavanaugh wrote. “Despite those requests, no commenter produced such evidence indicating that changing the rules was likely to harm minority and female ownership.”

Ultimately, the Court concluded that the FCC made a reasonable predictive judgment based on the evidence before it. “In light of the sparse record on minority and female ownership and the FCC’s findings with respect to competition, localism, and viewpoint diversity, we 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,” Justice Kavanaugh wrote.