O'Rielly Says SCOTUS Ruling Against the FCC Would Create a 'Morass'

If the Supreme Court rules against the FCC in Prometheus IV or “punts” without making a clear decision, the agency will be left in a “morass” that could take another decade to address, said former Commissioner Mike O’Rielly on a Federalist Society virtual panel Monday: “If that’s what the Supreme Court comes up with, we’re stuck.” The FCC majority pinned its hopes on SCOTUS from the beginning, and the agency went into the litigation “looking past the 3rd Circuit,” he said: “I didn’t much care what the 3rd Circuit’s opinion was.”

The current FCC isn’t likely to try to grapple with the ownership issues in the case, O’Rielly said. “The status quo works politically for many people,” he said. “It doesn’t work for the marketplace.” No one becomes an FCC commissioner “and says, ‘I’d love to jump into this debate that’s not ever gonna solve itself,” he said. O’Rielly worked on the Telecom Act that created the quadrennial review process at the heart of the case, and he said Monday no one in the room would have predicted ownership rules would have remained unchanged for so long.

The high court has had prior opportunities to take up the Prometheus matters and declined to do so, said former NAB General Counsel Jane Mago. Its choice to do so now indicates an appetite to take action, she said. The justices' focus at oral argument appeared to be on principles of administrative law and standards for judicial review of regulations, she said: “I’m hoping for language that helps to clarify that.”

Harris Wiltshire's Chris Wright said the ruling shouldn’t be an important one on administrative law but a rebuke of the FCC. Wright said his feeling from last Tuesday's oral argument (see 2101190070) was that Justices Stephen Breyer and Brett Kavanaugh understood the FCC hadn’t adequately justified that its relaxation of ownership rules wouldn’t hurt minority and female ownership.

A ruling in the FCC’s favor could empower other agencies to make sudden reversals in their policies, Wright said. If the commission had said in the media ownership reconsideration order in question that it wasn’t concerned about the ownership rules' effects on minorities and women, it might have had a better argument, he said. The agency instead made predictive judgment that consolidation wouldn’t harm those groups, Wright said: “That doesn’t pass the straight face test.” SCOTUS should rein the FCC in, he said.

Panelists noted arguments before the court focused on the newspaper/broadcast cross-ownership rule. Few broadcasters want to buy a newspaper, O’Rielly said, showing the implications of the rules at stake are narrow. “There needs to be some consolidation to maintain economic viability in face of everything changing,” said Mago. Justices can see that other aspects of the rule changes at stake would have adverse effects on ownership diversity, Wright said. He said the issues raised in the case about the 3rd Circuit’s continuing jurisdiction over Prometheus cases does “raise questions” about a single panel of judges becoming a “super FCC” on an issue.

Broadcast ownership isn’t the only proceeding in which the commission is forced to make decisions with insufficient data, O’Rielly said. “The record is paltry in so many issues.” He said commissioners “beg” entities to create a more fulsome record in some proceedings and still find a lack of comments addressing particular issues.