3rd Circuit Stays FCC's Media Ownership Rule Changes

September 3, 2003. The U.S. Court of Appeals (3rdCir) issued an order [3 page PDF scan] in Prometheus Radio Project v. FCC, staying the Federal Communications Commission's (FCC) new media ownership rules, pending resolution of the proceeding. The Appeals Court granted this preliminary relief without making any finding of likelihood of success on the merits.

On June 2, 2003, the FCC announced its Report and Order and Notice of Proposed Rulemaking [257 pages in PDF] amending its media ownership rules. See, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003. The FCC released the text of the order on July 2, 2003. Numerous petitions for review of various parts of the order have been filed, mostly in the District of Columbia. On August 19, the Judicial Panel on Multidistrict Litigation consolidated all of the petitions in the Third Circuit. The Appeals Court's case number assigned to Prometheus Radio Project's (PRP) petition is No. 03-3388.

The PRP stated in its August 13, 2003 Petition for Review [3 pages in PDF] that it is "an unincorporated collective of radio activists which has been committed to expanding opportunities for the public to build, operate and hear low power FM radio stations."

The PRP argued that the order is "arbitrary and capricious" and "violates both the Communications Act and Administrative Procedure Act's public notice requirements." It requested that the Court "reverse and remand the FCC’s Order to the extent that it unlawfully repeals the prior ownership rules and adopts new ownership regulations, reinstate the prior ownership rules, and grant all other relief as may be just and proper."

The PRP's Motion for Stay Pending Judicial Review [21 pages in PDF] set out its arguments in more detail. It asserted that "if the Court fails to issue a stay, massive consolidation of the broadcast industry will occur before judicial review can be completed. This will cause irreparable harm to Petitioner and to the American public, whose right to receive information is ``paramount.´´"

The FCC argued in its Opposition to Motions for Stay Pending Judicial Review [22 pages in PDF] that the "Court should deny the motions for stay pending judicial review because movants have failed to make the necessary showing of irreparable harm and a likelihood of success on the merits."

On the question of irreparable harm, the FCC argued that "While the new ownership rules set forth the general principles that will guide the exercise of the Commission’s discretion, they by themselves approve no new transactions; under the Communications Act, a party seeking to acquire a radio or television broadcast station must still obtain Commission approval for each license transfer."

Appeals Court Order. The Appeals Court, with Judges Scirica, Ambro and Fuentes presiding, heard oral argument on the motion for stay on Wednesday, September 3. Later in the day it issued a very brief per curiam order.

The order recites that "Before the Court is Petitioner's motion to stay the effective date of Respondent Federal Communication Commission's new ownership rules, 2002 Biennial Regulatory Review, 68 Fed. Reg. 46,286 (Aug. 5, 2003), pending judicial review. Extensive oral argument was hear on September 3, 2003." (Footnotes omitted.)

The Court then identified the legal standard for issuing a stay. "We consider four factors in determining whether to grant the motion to stay: (1) the movant's likelihood of success on the merits; (2) whether the movant will suffer irreparable harm if the request is denied; (3) whether third parties will be harmed by the stay; and (4) whether granting the stay will serve the public interest. E.g., Susquenita Sch. Dist. v. Raelee, 96 F.3d 78, 80 (3d Cir. 1996); In re Penn Cent. Transp. Co., 457 F.2d 381, 384-85 (3d Cir. 1972)." However, the Court subsequently omitted the first element, likelihood of success on the merits, from its requirements.

The Court continued that "At issue in this litigation are changes adopted by the FCC that would significantly alter the agency's ownership rules for multiple media properties, including national television networks, local broadcast affiliates, radio stations, and newspapers. Petitioner has alleged harms from industry consolidation contending they would be widespread and irreversible if they occurred. The harm to petitioners absent a stay would be the likely loss of an adequate remedy should the new ownership rules be declared invalid in whole or in part. In contrast to this irreparable harm, there is little indication that a stay pending appeal will result in substantial harm to the Commission or to other interested parties. Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977). Granting the stay pending judicial review would maintain the status quo in order to permit appellate review after briefing on the merits."

The Court then wrote that "While it is difficult to predict the likelihood of success on the merits at this stage of the proceedings,3 these harms could outweigh the effect of a stay on Respondent and relevant third parties. Given the magnitude of this matter and the public's interest in reaching the proper resolution, a stay is warranted pending thorough and efficient judicial review."

Footnote 3 states that "An order maintaining the status quo is appropriate when a serious legal question is presented, when little if any harm will befall other interested persons or the public and when denial of the order would inflict irreparable injury on the movant. There is substantial equity and need for judicial protection, whether or not movant has shown a mathematical probability of success. Holiday Tours, 559 F.2d at 844."

And finally, the Court concluded, "For the foregoing reasons, we will grant the Petitioner's motion to stay the effective date of the FCC's new ownership rules and order that the prior ownership rules remain in effect pending resolution of these proceedings."

Forum Shopping. On August 19, the Judicial Panel on Multidistrict Litigation issued its Consolidation Order [PDF]. This order states that petitions for review of the FCC's order had been filed in four circuits -- the District of Columbia, Second, Third, and Ninth Circuits. It ruled that "The Panel has randomly selected the United Stated Court of Appeals for the Third Circuit in which to consolidate these petitions for review."

Nine petitions had been filed; six of the nine had been filed in the District of Columbia; one each had been filed in the three other circuits.

While the PRP filed its Petition for Review in Third Circuit, it is represented by Andrew Schwartzman, P/CEO of the Media Access Project (MAP), an interest group based in the District of Columbia, at 1625 K Street. (MAP's website also lists former FCC Chairman William Kennard as a Director.)

Similarly, the party that filed the petition for review in the Ninth Circuit, the Media Alliance, is represented by the Georgetown Institute of Public Representation, which is a part of Georgetown University's law school, in the District of Columbia.

FCC Reaction. The FCC's Office of Media Relations issued a release that states, in full, "The following is a statement to be attributed to an ``FCC spokesman´´ on the stay of the FCC broadcast ownership rules ordered today by the U.S. Circuit Court of Appeals for the Third Circuit: ``While we are disappointed by the decision by the court to stay the new rules, we will continue to vigorously defend them and look forward to a decision by the court on the merits.´´"