*Prometheus Radio Project v. Fed. Commc'ns Comm'n

• Decision Date: 25 May 2016
• Docket Number: No. 15-3866,No. 15-3863,No. 15-3864,No. 15-3865,15-3863,15-3864,15-3865,15-3866
• Citation: 824 F.3d 33
• Parties: *Prometheus Radio Project v. Federal Communications Commission; United States of America Howard Stirk Holdings, LLC, Petitioner in No. 15-3863 Nexstar Broadcasting, Inc., Petitioner in No. 15-3864 National Association of Broadcasters, Petitioner in No. 15-3865 Prometheus Radio Project, Petitioner in No. 15-3866 * (Amended per Clerk Order of March 14, 2016)
• Court: U.S. Court of Appeals — Third Circuit

824 F.3d 33

*Prometheus Radio Project

v.Federal Communications Commission; United States of America

Howard Stirk Holdings, LLC, Petitioner in No. 15-3863

Nexstar Broadcasting, Inc., Petitioner in No. 15-3864

National Association of Broadcasters, Petitioner in No. 15-3865

Prometheus Radio Project, Petitioner in No. 15-3866

* (Amended per Clerk Order of March 14, 2016)

No. 15-3863

No. 15-3864

No. 15-3865

No. 15-3866

United States Court of Appeals, Third Circuit.

Argued April 19, 2016

Opinion filed May 25, 2016

Colby M. May, Esquire, 201 Maryland Avenue, N.E., Washington, DC 20002, Counsel for Petitioner, Howard Stirk Holdings, LLC

Kim M. Keenan, Esquire, David Honig, Esquire, Minority Media & Telecommunications Council, 3636 16th Street, N.W., B–366, Washington, DC 20010, Counsel for Intervenor Petitioner, Multicultural Media, Telecom and Internet Council

Eve Klindera Reed, Esquire, Brett A. Shumate, Esquire, Wiley Rein LLP, 1776 K Street, N.W., Washington, DC 20006, Counsel for Intervenor Petitioner, Mission Broadcasting Inc.

Jonathan B. Sallet, General Counsel, David M. Gossett (Argued), Deputy General Counsel, Jacob M. Lewis, Associate General Counsel, Clifford G. Pash, Jr., Esquire, James M. Carr, Esquire, Richard K. Welch, Esquire, Federal Communications

Commission, Room 8–A833, 445 12th Street, S.W., Washington, DC 20554, Counsel for Respondent, Federal Communications Commission

William J. Baer, Assistant Attorney General, Kristen C. Limarzi, Esquire, Robert J. Wiggers, Esquire, United States Department of Justice, 950 Pennsylvania Avenue, N.W., Washington, DC 20530, Counsel for Respondent, United States of America

Helgi C. Walker, Esquire (Argued), Ashley S. Boizelle, Esquire, Lindsay S. See, Esquire, Gibson Dunn, 1050 Connecticut Avenue, N.W., 9th Floor, Washington, DC 20036, Rick Kaplan, Esquire, Jerianne Timmerman, Esquire, National Association of Broadcasters, 1771 N Street, N.W., Washington, D.C. 20036, Counsel for Petitioner/Intervenor Respondent, National Association of Broadcasters

Patrick F. Philbin, Esquire (Argued), Kirkland & Ellis, 655 15th Street, N.W., Suite 1200, Washington, DC 20005, Counsel for Petitioner/Intervenor Respondent, Nexstar Broadcasting, Inc.

Angela J. Campbell, Esquire (Argued), Eric G. Null, Esquire, Andrew J. Schwartzman, Esquire, Drew T. Simshaw, Esquire, Institute for Public Representation, Georgetown University Law Center, 600 New Jersey Avenue, N.W., Washington, DC 20001, Counsel for Petitioner/Intervenor Respondent, Prometheus Radio Project, Other Intervenor Respondents Benton Foundation; Common Cause; Media Alliance; Media Council Hawaii; National Organization for, Women Foundation; Office of Communication, Inc., of, the United Church of Christ; National Association of, Broadcast Employees and Technicians—Communications, Workers of America

David E. Mills, Esquire, Jason E. Rademacher, Esquire, Cooley LLP, 1299 Pennsylvania Avenue, N.W., Suite 700, Washington, DC 20004, Barry J. Ohlson, Esquire, Cox Enterprises, Inc., 975 F Street, N.W., Suite 300, Washington, D.C. 20004, Counsel for Amicus Petitioner, Cox Media Group Inc.

William J. Kolasky, Jr., Esquire, Kathleen M. Fones, Esquire, Katherine L. Steele, Esquire, Hughes Hubbard & Reed LLP, 1775 I Street, N.W., Suite 600, Washington, DC 20006, Morgan J. Feder, Esquire, Justin Ben–Asher, Esquire, Sigrid Jernudd, Esquire, Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, NY 10004–1482, Geoffrey A. Manne, Esquire, R. Benjamin Sperry, Esquire, International Center for Law and Economics, 2325 E. Burnside Street, Suite 301, Portland, OR 97213, Counsel for Amicus Petitioner, International Center for Law and Economics

Before: AMBRO, FUENTES and SCIRICA, Circuit Judges

OPINION OF THE COURT

AMBRO

, Circuit Judge

TABLE OF CONTENTS

I. Background...37

II. Jurisdiction and Standard of Review...39

A. Delayed agency action...39

B. Final agency action...40

III. The Eligible Entity Definition...40

A. The FCC's objectives...40

B. Prometheus I and its aftermath...42

C. Prometheus II ...43

D. Aftermath of Prometheus II ...45

E. Discussion...48

IV. Failure to Complete Quadrennial Review...50

A. The costs of delay...51

B. Vacatur is not appropriate...52

C. Deregulatory Petitioners have waived other forms of relief...53

V. The Joint Sales Agreement Rule...54

A. Background...54

B. Discussion...57

VI. Conclusion...60

Twelve years have passed since we first took up challenges to the broadcast ownership rules and diversity initiatives of the Federal Communications Commission (“FCC” or “Commission”). In some respects the Commission has made progress in the intervening years. In key areas, however, it has fallen short. These shortcomings are at the center of this dispute—the third (and likely not the last) round in a protracted battle over the future of the nation's broadcast industry. Specifically, the parties present challenges to the Commission's “eligible entity” definition, its Quadrennial Review process, and its rule on television joint sales agreements.

Although courts owe deference to agencies, we also recognize that, “[a]t some point, we must lean forward from the bench to let an agency know, in no uncertain terms, that enough is enough.” Public Citizen Health Research Group v. Chao , 314 F.3d 143, 158 (3d Cir. 2002)

(emphasis and internal quotation marks omitted). For the Commission's stalled efforts to promote diversity in the broadcast industry, that time has come. We conclude that the FCC has unreasonably delayed action on its definition of an “eligible entity”—a term it has attempted to use as a lynchpin for initiatives to promote minority and female broadcast ownership—and we remand with an order for it to act promptly.

Equally troubling is that nearly a decade has passed since the Commission last completed a review of its broadcast ownership rules. These rules lay the groundwork for how the broadcast industry operates and have major implications for television, radio, and newspaper organizations. Although federal law commands the Commission to conduct a review of its rules every four years, the 2006 cycle is the last one it has finished; the 2010 and 2014 reviews remain open. Several broadcast owners have petitioned us to wipe all the rules off the books in response to this delay—creating, in effect, complete deregulation in the industry. This is the administrative law equivalent of burning down the house to roast the pig, and we decline to order it. However, we note that this remedy, while extreme, might be justified in the future if the Commission does not act quickly to carry out its legislative mandate.

Whereas the first two issues before us involve agency delay, the third is a challenge to agency action. The Commission regulates the number of television stations a company can own. In 2014, it determined that parties were evading its ownership limits through the influence exerted by advertising contracts known as joint sales agreements. As a result, it created a rule designed to address this perceived problem. However, we conclude that the Commission improperly enacted the rule; hence we vacate it and remand the matter to the Commission.

I. Background

This is the third volume in a long-running saga that has its roots in the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996).

Section 202(h) of that law imposes on the Commission what was initially a biennial—and is now a quadrennial—obligation to examine its broadcast ownership rules. Broadly speaking, the purpose of these rules is to limit consolidation in the industry by capping the amount of common control that is permissible. Section 202(h) provides that the Commission “shall” review its rules on broadcast ownership every four years, “shall determine whether any of such rules are necessary in the public interest as the result of competition,” and “shall repeal or modify any regulation it determines to be no longer in the public interest.” Id. § 202(h), 110 Stat. at 111–12, as amended by Pub. L. No. 108-199, § 629, 118 Stat. 3

, 99–100 (2004) (making review quadrennial as opposed to biennial).

Our first foray into § 202(h) came in 2004 when we ruled on challenges to the Commission's 2002 review of its ownership rules. See Prometheus Radio Project v. FCC , 373 F.3d 372 (3d Cir. 2004)

(“Prometheus I ”). Though § 202(h) is limited to a review for whether ownership rules remain necessary in light of competition in the broadcast industry, Prometheus I also involved a challenge to the Commission's efforts to promote minority and female broadcast ownership.

Following our decision in Prometheus I

, the Commission set about fine-tuning its minority and female ownership initiatives at the same time that it conducted its 2006 Quadrennial Review. In December 2007, it adopted two orders: the first completing the 2006 review and the second implementing diversity-related efforts. (Though adopted in late 2007, they were released in early 2008.) The former has become known as the “2008 Order.” See

2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Report and Order and Order on Reconsideration , 23 F.C.C.R. 2010 (Dec. 18, 2007). Meanwhile, the latter is called the “Diversity Order.” See

Promoting Diversification of Ownership in the Broadcasting Services, 2006 Quadrennial Regulatory Review—Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Report and Order and Third Further Notice of Proposed Rulemaking , 23 F.C.C.R. 5922 (Dec. 18, 2007). In 2011, we decided challenges to both the 2008 Order and the Diversity Order. See

Prometheus Radio Project v. FCC , 652 F.3d 431 (3d Cir. 2011) (“Prometheus II ”).

In Prometheus I

and Prometheus II we reviewed challenges to completed § 202(h) review cycles. But, in the aftermath of Prometheus II, the process broke down. The 2010 Quadrennial Review, which was...