Courthouse Steps Decision Webinar: FCC v. Prometheus Radio Project

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Nick Marr:  Welcome, everyone,  to The Federalist Society Courthouse Steps Decision Webinar. Today, April 9, 2021, we're covering the Supreme Court's unanimous decision in FFC v. Prometheus Radio Project. I’m Nick Marr, Assistant Director of Practice Groups here at The Federalist Society.

 

      As always, please note that expressions of opinion on our call today are those of the experts.

      We're very pleased to be joined by a great panel. They covered the oral arguments in this case. They're back to over the decision, and so we thank them for their time. I'm just going to introduce our moderator, and he'll take it from there. This afternoon we're very pleased to be joined by Mr. Larry Spiwak. He's the President of the Phoenix Center for Advanced Legal and Economic Public Policy Studies. He's also an Executive Committee Member of our Federalist Society Telecommunications & Electronic Media Practice Group, a sponsor of this event today. So with that, Larry, thanks for being with us. I'll give the floor to you.

 

Larry Spiwak:  Thank you very much, Nick, and thank you, everybody, for joining us. So we really appreciate it. Today as Nick said, the topic of our conversation is Courthouse Steps Decision FCC v. Prometheus Radio. We are once again privileged to have join us Jane Mago who's former General Counsel of the FCC; Chris Wright, another former General Counsel of the FCC; and Michael O'Rielly who's a former Commissioner of the FCC; and me, telecom [inaudible 00:01:48]. But anyways, thank you all.

 

      We had done, just as quick bit of background, last January 19th, literally the day before the inauguration, the Supreme Court heard oral arguments in the case of Prometheus Radio. To make a very long story hopefully short, the case involved the FCC's almost 19-year-old struggle to modernize its media ownership rules pursuant to § 202 of the Communications Act. To summarize very briefly, basically the case at bar, the Third Circuit Court of Appeals -- and not just the Third Circuit but the exact same panel of judges for all those years, in this case, we call it Prometheus Three -- held that the FCC had failed to consider the effect of deregulation on woman and minority ownership in its last go round, and that in particular that the FCC could not move forward until it produced new studies that satisfied the court.

 

      So later that week, all of us on this panel who are here, we held a webinar to discuss what we could clean from the oral arguments. And based on the briefs, this case could have raised a wide variety of issues which made it so fascinating. It involved the bounds of the FCC's public interest authority, whether the FCC is bound to consider woman and minority ownership under 202 (h), what does it take to satisfy the arbitrary capricious scheme on the APA, questions of judicial review. The conversation was excellent. We really enjoyed ourselves, and we generally came to the consensus that based on the questions that we heard the justices ask, none of us had any idea how the Court was going to rule. It could have gone all over the place. It was interesting, plus it's actually still very much COVID so it was done by conference call. But none of us had any idea.

 

      Well, last week the Court reached a unanimous decision, and now we know what the Court ruled on. And it turned out that rather than touch all of these issues of the public interest authority, whether or not the FCC had to consider women and minority ownership, they issued a very, very narrow ruling which is probably why they were able to get the 9-0 decision. The decision was authored by Justice Kavanaugh echoing the piece that he -- I guess an earlier case—I forgot it off the top of my head—that he'd written when he was on D.C. Circuit.

 

      Basically what he said was he just focused exclusively on the arbitrary capricious question and the related issue of judicial deference, and what he said was, basically, the case that it's a very deferential standard and reaffirming the idea that a court may not substitute its judgment for that of an agency. That, of course, opens up a whole bunch of interpretive questions going forward.

 

      So what I hope to do today is talk about two general themes. First theme will be how this case impacts administrative law, generally, and in particular drawing on the expertise of our distinguished panel today, how it affects agency decision making, particularly at the FCC because that's what we all work, and then what comes next in the quadrennial review because that's still very much on the table.

 

      So let's move now to the first broad area which is about what I would call questions of administrative law. I'd like to open this up with for to address it to our four to our two former FCC general counsels. and they're looking with dread at me here on the Zoom meeting here. So let me give, Jane and Chris, let me give you a hypothetical. And I'm sure that you have faced this conundrum multiple times during your respective terms. You're sitting in your office, and yes, I can still say on the eighth floor because that's when you guys were there. In fact, right after our last meeting, the [inaudible 00:06:30] had said, "I can't believe Larry mentioned the eighth floor. It's now the tenth floor." And I'm like, "Hey, eighth floor forever." Right, Mike? So there you go.

 

      So, sitting in your office and we're going through the process of reviewing a draft Auer, and we know that the draft Auer is both highly political and—how shall we put it this way—a legal a case of first impressions. In other words, we know we're really pushing the boundaries here. And I have no doubt that both Chris and Jane, this is not unfamiliar territory for you guys on more than one occasion, so you've got this. And look, that's natural given the fact that the Communications Act is almost 90 years old, and it's tough to fit a square peg in a round hole.

 

      So here's the first thing, right? Under established case law—and I think the Court still upheld this point—an agency still has to show its whys and wherefores. I don't think that Prometheus stands for the fact that the FCC has a blank slate. So you still have to show your whys and wherefores to pass arbitrary and capricious muster. But Justice Kavanaugh, he was really adamant in the decision. He mentioned several times that the arbitrary and capricious standard was highly deferential. So if you know you've got—how should I put it—the ref working on your side, so to speak. You know you now have an advantage. I think we can say this. What are your thoughts going on -- how rigorous does an FCC -- does an agency have to be to show its whys and wherefores? What would you be looking for going, "I know the presumption's in my favor, so what do I really need to do here?" Jane, what do you think about that?

 

Jane Mago:  I think you nailed it there. You have to look at the order, and you have to keep the standard in mind. The words that I wrote down reflect Justice Kavanaugh said was he said that the agency had to be reasonable, and that its decision had to be reasonably explained. Now, throw deferential onto that and that seems to me that it's got an awful lot of wiggle room.

 

      When I was General Counsel I remember I had a rule that I called you had to have the more than two sentences. We had a particular issue that had come up and came up any number of times, and when you reversed is not having had enough explanation. It was when you had less than two sentences that tried to explain what you were talking about. So it seems to me there that one of the things that you need to do is to truly cover the waterfront when it comes to the evidence that's in front of you. And that came up in this case too. There was some question about some of the studies that the Prometheus folks said the agency hadn't take care of, hadn't looked at, and the Court said they did good enough. And that's always going to be a judgmental stand.

 

Larry Spiwak:  Chris?

 

Chris Wright:  So that's right, and we used to run seminars for the people on the Commission who would actually write the decisions. Jane was involved in that while I was there and no doubt after I left. And that was the rule. I sort of hesitated to explain how much deference the Court was likely to give the Commission. But the rule was you've got a hard issue. It's got a question of statutory interpretation, let's say. You've got a question of which way the evidence weighs in this particular case. You've got to wrestle with it. You've got to wrestle with it in the text. You've got to show your work. Two sentences sure does sound like too little to do anything other than a kind of ipse dixit. But part of the point was if you take at least a fair look at both sides of the argument, acknowledge that there's something to the side you're about to reject, but then explain why the commission chooses to make the interpretation it does or the policy choice it does, you ought to get upheld.

 

      Actually, we'd done a study in the early '90s that showed that actually there were a lot of reversals that were largely just based on refusing to acknowledge that the Commission was changing position. So we were emphasizing the idea that the Commission can change position, but it's got to acknowledge that it's doing so. And if you pretend you're not changing position and therefore don't explain why you're changing position, at that point in time the D.C. Circuit was striking the Commission's orders down left and right for that, as it ought.

 

      On the other hand, yeah, we've got a system where, as the law stands, the Commission gets a fair amount of leeway in interpreting the Communications Act and in choosing among competing arguments as to what, in the broadcast area for instance, that satisfies the public interest, and it ought to get deference.

 

      I am a little worried about how far the deference went here in terms of encouraging agencies not to collect data. Your hypothetical is we've been presented with an order. I’m sure Jane and I both had the experience of working with the chairman earlier in the process and sort of like, okay, we've got this rule making going. We don't have the order. We've got various submissions. How do we make sense of all of this? What do we ask for?

 

      In this case, of course, we do have a Third Circuit decision that said that the Commission's analysis flunked, got a failing grade in an introductory statistics course because the Commission just said well, the numbers went down and then they went up and didn't even take a look at did the percentage change which was the gradual recovery of ownership numbers by members of minority groups and women simply the result of an increase in number of stations or what's going on here. It was very cursory. The Commission complained in its brief that the other side was demanding regression analyses. Regression analysis wouldn't be a terrible thing, but certainly looking at percentages rather than numbers were. Justice Kavanaugh's paragraph, "To be sure," always a giveaway, "in assessing the effects of minority and female ownership the FCC did not have perfect empirical or statistical data," far from it. But then he goes on to say well, geez they asked for data and they didn't get any great data and the data they got wasn't perfectly clear, and so they were justified in choosing one way or another to go.

 

      I can't remember whether we misused this following phrase when I was there, but it seems like every agency, and the FCC is certainly among them, now knows that if they frame something in the sense of a predictive judgment, that often has the effect of triggering deference form the Court. But it's sort of like geez, we've got bad data. We haven't done any hard work to make the data better. We're just going to make a predictive judgment that bad things won't happen if we do what we want to do.

 

      And Jane and I would never be sitting in the office of the chair saying you're better off not collecting data because you might not like it, but I don't know. This decision would encourage agencies to do that on some occasions at least.

 

Michael O'Rielly:  Larry, can I jump in here? If I read the decision, though, the Court is saying the 202 (h) has no requirement for the Commission to conduct the studies. So that to me, there is this -- your point is that you should have a full record and Commission has -- and maybe in your time you wanted them to do certain things, but there is not built in obligation to do that. They look at the record as presented, and they make a judgment, and we made a judgement at the time. As much as I agree with Larry on so much, it's a narrow decision, but it's so expansive in terms of finally answering -- our long, national nightmare is ending, I think, if I look at this in terms of what it's deciding. I don't see how you can go back to the Third Circuit and have any claim to jurisdiction for the Third Circuit. So to me that -- you're going to get to that later?

 

Larry Spiwak:  Oh, absolutely.

 

Michael O'Rielly:  All right. I think to get to your point, though, Larry, in terms of an agency, I think it did provide the zone of reasonableness. That's been used in a lot of proceedings and a lot of decisions. And I think the Commission fully went through its obligation. So many items that we had to vote on and consider didn't have much of a record. What are you supposed to do in those instances? Is it on agency's obligations to go conduct its own survey every time, or study? What I read from the Court, it's saying absolutely not. It's not built into the statute and it's not -- your obligation it to look at the record as it is. I think that's huge for the Commission.

 

Larry Spiwak:  I was going end it, but before I do get to that exact point because I think you've hit on a really important thing. But let me just to follow up on my first question and then just modify the hypothetical a little, and we'll get exactly what you talked about, Mike.

 

      All right. Here's the second part of my hypothetical, Jane and Chris. You've now finished your term in service of public service and now you're sitting there as K Street lawyers, and I realize, Jane, you're in Florida. But picture this as a K Street lawyer and now you have the challenge it more. So this the second part, and I'll give you a great example where the Court is giving great deference, but I'll use an example the net neutrality cases that have come up, both in U.S. telecomm and the Mozilla case. I think they're classic examples, and that was not a case where there was a shortage of a record, right, Mike? That was definitely not the case.

 

      But in those cases, how shall we put it this way? In Mozilla, I know, Chris, you actually represented them, but one of the people just made up their data, and the Court looked at it and said, uh oh, math. I'm a generalist judge. I give up. Great deference, right? And so people are expecting or they're hoping that the whys in appellate court will go FCC are really messed up here, right, and sometimes a judge will do that, sometimes not. It's a fine line, but one of the frustrations -- look, I freely admit. I'm in the business of producing economic writ law and economic research. But sometimes when you do that, sometimes the court's like uh oh, math. So don't you have -- where, again, you want a strict review, but not to substitute the judgement of the court. Again, so does that help the FCC? Are we really giving, expanding the agency's power here? In other words, you've got a presumption of reasonableness, so to speak.

 

Chris Wright:  I thought one of the changes in the recent under Chairman Pai and Commissioner O'Rielly was expand the technical expertise of the Commission, and I forget what the office is called because I guess I think of it as --

 

Larry Spiwak:  - Always be OPP.

 

Chris Wright:  OPP. Well, whatever.

 

Jane Mago:  OPP is the [crosstalk 00:19:30] --

 

Larry Spiwak:  - I refuse change.

 

Chris Wright:  So what should agencies do? And what should agencies be encouraged to do? And I think agencies should be encouraged to beef up their statistical analysis capabilities and their economic analysis capabilities and do as professional a job as possible. And the leadership of the agency ought to pay attention to the professional opinions that come to them whether they meet their existing expectations or not. That's what we hope our agency should do no matter what party's in charge. And so that's good. Again, I worry that this decision, though, kind of encourages the opposite. If instead of looking at it in this way, you say well, I just want to do what I'm going to do, and I'll be better off if I just don't look at that, don't get that bad data, and don't look at it. So that's my concern.

 

Jane Mago:  I don't think that that's really a concern especially for the agency that I grew up in, if you will. I think that there was always an effort to try to figure out what was the right answer and what was there. The staff on the agency is an extraordinarily professional group that I think does a very good job. And I don't think what the Court said here is an indication that you should simply pretend that none of that exists over there. I think what they said was you can't create a standard that says it's impossible to ever change these rules, which is essentially what they were really suggesting happened here is that if you have something that you keep requiring the agency you must get this. You must get this. You must get that. That's not what the APA requires and it's not what 202 (h) requires. I think that's what the Court said.

 

Michael O'Rielly:  I would agree to Chris's point, though, and in terms of OEA -- it's now referred to as OPP -- I wish it would do anything to what you described in terms of cost benefit analysis. During my time it is just awful, and I don't see any suggestion that it's going to improve anytime soon. The math that was done in those parts of the proceedings are just absolutely atrocious, and that's no disrespect to the staff. Oftentimes they're required to crank out a document in X amount of time. There is where I'd love some empirical analysis, and I'm begging the outside world to help fulfill the record.

 

      To Judge Kavanaugh's point, the outside parties could certainly amplify that, and then really then the Commission has something before it to consider. But it's just awful, and I don't see it improving anytime soon, and this says to me that, to Larry's point, this says to me you didn't have an obligation to do a statutory -- there was no requirement to do these studies that the Court was mandating you do, [inaudible 00:23:09] points you couldn't do because it had its own agenda. I think that's both good and bad, and I agree with Chris's concern. It's not probably going to get any better on some of that.

 

Larry Spiwak:  Well, let's build on that because that's exactly where I wanted to go, and that's sort of the practical aspects of this, particularly if you practice in front of the FCC. Because we talked about -- and I think the Court was very upfront that they gave the Commission a lot of credit for trying to make lemonade out of the lemons that it had. I don't know whether you can distinguish the case or not. It always reminds me going to your point, Mike, when I talked to former Chairman Ajit Pai, you've got to present it to the public as look I've got to deal with the record as presented, so if it's garbage in, it's garbage out.

 

      And I know that you and I have talked for years, Mike, about the lack of an adequate record at the FCC. I know when I was a staffer there, it still continues. During a lot of the major cases rather than do serious work, there was an emphasis on clicktivism where you can have 10,000 people file email comments going, "I don't like this rule." Then the chairman at the time would go, "I've got 10,000 people." Well, I'm like, "How do you write a defendable ordered on clickivism?" But that's where they put the emphasis. I think it sort of goes to the nature of the administrative process, which I think is sad, on how you do that.

 

      So let me ask you sort of following up to that. One, do we think this case can convince the industry that maybe good work is important? We've talked about this for years, Mike, and yet, everybody's like, "Eh, we got this." It's a political thing. And yet they don't realize you've got to write, and staff has to write an order and yeah, I got this because you might think you've got the votes doesn't -- only it's for whatever it is now -- doesn't mean you could write a sustainable order. And then building on what you said, Mike, you have OPP now, Office of Economic Analysis, whatever they call it now, and the Commission over the years has tried to step up. I know from personal experience sometimes when the results stand up, maybe those studies never see the light of day. But they have tried to put out, over the years going back to the old OPP working paper series, do some research. As a former commissioner, Mike, how does this affect? Does the agency have any impetus to do anymore of its own research? What do you think this means for that just on a real world basis?

 

Michael O'Rielly:  Well, I applaud former Chairman Pai for beefing up OEA and creating what exists today. I pushed for it as well. I thought it was a worthy of a bureau kind of to the FTC structure. But I think the hard part is you can have all the apparatus you want, but how do you get parties to -- and to your point -- how do you get parties to want to file and do the due diligence. That's just a tough one. Except for two or three major items that everyone already knows about, the rest of the items have very paltry records to go off of. I used to read the comments, and you're like, wow, this is really tough to figure out the landing spot. So I think the decision gives the Commission more deference, and we'll have to deal with that, but I do worry that OEA -- and they're doing some of their papers -- a lot of the early papers are confirming what we're already headed towards.

 

      What I was interested in -- and I'll tell you -- I said this publicly. I certainly said it at OEA. I was waiting for that moment they are presented an item, and they did their due diligence and said you know what the cost aren't -- the benefits don't justify the cost and we should do this path. And it never happened on my watch. I'm hoping at some point it does because that means that the process actually works in my mind. But we'll just have to see.

 

Larry Spiwak:  Jane or Chris, do you have any comments on that?

 

Jane Mago:  I was just thinking about the quirkiness of this case in particular when we start talking about economic analysis and such things. It was the 2002 order that tried to put a really extreme economic box in how to define how you would have rules that would work and not, and they had a whole diversity index and a whole lot of other things that went with hit that the Third Circuit shot down in the first place. And there were some flaws in that. Let me be clear.

 

      But that was probably the most serious effort that I think that the Commission ever tried to look at these local ownership rules and put some economic framework around it and figure out how they were going to -- how they could go forward, and it got shot down. So again we went through this process, and years later here we are saying okay, what are the rules. Well, you have to have agency. You have to ask people to help you. You've got to hope people will give you something that's pretty good You've got to do your best to sort it all out, and then if you do all of that and explained it in more than two sentences, you're going to be okay.

 

Larry Spiwak:  Chris?

 

Chris Wright:  Well, perhaps turning a little bit to sort of the issue, I guess what this triggers in my mind -- now of course we've got a different Commission, and it's entitled to a great deal of deference too. And sort of well, so what should it do in terms of further analyzing this issue. And of course it has to keep analyzing the issue at least every four years. Again, I think we'd all be better off if the Commission had good data and could analyze it. I'm forgetting the name of the latest forum that is supposed to obtain ownership information about broadcasting stations, and the main thing I know is that everyone seems to agree that prior to about 10 or 12 years ago, the data collection was not reliable. I don't know whether the new data is reliable. If it is, on some level with respect to this issue, it ought to be possible to take a look and see what -- there'll be some consolidation under this round of rules presumably. And I hope it is. At least just doesn't sound all that complicated to figure out did that round of consolidation have any effect on minority and women ownership or not? And maybe we can actually get some useful, empirical information this time around.

 

Larry Spiwak:  Well, let me ask you guys sort of one last more generic question which I think will lead me into the second part of our discussion. But again, there's a ruling dealing with all Commission rule makings, agency, so we talked about—and Mike, you brought this up—the need for cost benefit analysis and the FCC when they established cost of analytics. They deliberately incorporated the OMB Circular A-4 which required a cost benefit analysis. Obviously the FCC's an independent agency and not part of the executive branch.

 

      But literally one of the first things that President Biden coming into office is he revised OMB Circular A-4. Now although they still require a cost benefit analysis, an agency must also ensure the regulation "promotes public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interest of future generations." Well, these all might be worthy and aspirational goals. I call tell you that our economics team are asking how does one measure that, particularly in a rule.

 

      So again, how do we think that the Court's ruling with this deference -- because you can now see that that the Biden administration is really untethering from cost benefit analysis to include -- how shall we put it politely -- non-economic factors with the deference. Do we see the rise in the administrative state of this if the Court is really sort of begin putting its imprimatur in increased deference to agencies? Jane, what do you think?

 

Jane Mago:  I'm not quite sure how to answer that one [laughter]. You throw out a whole lot of other factors, and you try to put them in and say, and put them into boxes, say well, this is a cost benefit analysis, but a bunch of the costs that you might be trying to identify are very hard to quantify. And when you can't quantify costs or benefits, I'm not sure how you get to a reasonable conclusion. And that's just going to put you back in the courts where they're going to say, well, this looks good to us or it doesn't look good to us somewhere along the way. And I'm not sure that's all that different.

 

Larry Spiwak:  Right. Chris, what do you think?

 

Chris Wright:  So I guess this is similar to what Jane said in the sense that there are -- I like numbers myself, but there are hard to quantify costs and benefits that are very important as well. And for better or worse, I think the number crunching is very important, but it's never going to be everything that is necessary. And with respect to the particular statute we have here, where since 1934 the public interest has been what matters and that's obviously a broad, flexible phrase, and different Commissions have put different emphases on it forever. And of course, the world is changing. So it's never going to be easy to determine what's in the public interest, and courts have to give the FCC a certain amount of latitude, I think.

 

      But ultimately we can hope that every Commission will do a good job of trying to get what data it can and do an honest job of sort of what are these non-quantifiable costs and benefits and explaining how they weigh them. And judges will have to simultaneously be somewhat deferential, but I guess not so deferential that just sort of if you say in two sentences here's what we're going to do, and we will make a predictive judgement that things will be better if we do them. Geez, that just can't be enough.

 

Jane Mago:  And you also can't put it in a footnote.

 

Chris Wright:  Right. That's a good rule too.

 

Jane Mago:  The old no footnote rule.

 

Michael O'Rielly:  Larry, can I just add to the point?

 

Larry Spiwak:  Please.

 

Michael O'Rielly:  If I didn't think the cost benefit analysis was being done before, I certainly don't think that after you add all these factors anything is going to be done going forward. And so that's just how it is going to be, and we kind of move on and just accept it for what it is.

 

Larry Spiwak:  All right. Well, now let's turn to part two, the implications of the case on the next quadrennial review. Without a doubt, I think everybody can agree it was certainly a victory for Chairman Pai, but to me, I think the real question is is it a pyrrhic victory? As Jane and Mike and Chris have all pointed out by the express terms of the statute, it is a quadrennial review, so we are coming back to this. It is not going away. Now, as I said at the beginning of our webinar, the majority ran for the hills -- speaking of footnotes, Jane -- and did not want to touch with a 10-foot pole the issue of whether § 202 (h) requires the Commission to consider women and minority ownership. They put that into a footnote. They said we're not dealing with it. Forget it.

 

      However, in his concurrence, Justice Thomas argued very forcefully that the answer to this question is no. He pointed out -- which is actually a point I made in my amicus brief that "from its infancy, the FCC has focused on consumers not producers." So we're coming back here. The issue over whether the FCC has to consider the effect of deregulation on women and minority owners has not been answered. What's going to happen with the next quadrennial review comes up? Jane, I'll start with you, please.

 

Jane Mago:  Okay. I think that it's going to be much the same as we've seen before. When Commissions change, the attitude and focus of the policies has a way of changing as well. And so each particular Commission's going to look at this and say, okay, is this important? Is this aspect of the matter more important or less important? It's the same thing we were just talking about a moment ago. You're weighing what you think of as a factor. Now I think Justice Thomas's concurrence was interesting, focusing several times on this notion that what the Commission was doing was using all of these things as a proxy for what is viewpoint diversity and the importance of viewpoint diversity. But I think that that proxy factor is still there, and I expect that this Commission is going to focus on.

 

Larry Spiwak:  Chris?

 

Chris Wright:  Right. The opinion leaves us where we are sort of the same way the Net Neutrality Decision seemed to have done. The next administration has a broad area in which to move. And I know the Court simply didn't reach it as it says in footnote three, but I don't think the Court would reach identifying that the public interest has to require that the Commission doesn't consider the effect of the total changes on various issues relating to viewpoint diversity of which I think female and minority ownership is one.

 

      So I expect this next Commission to adopt a different reading of § 202 (h), one that emphasizes the provision, twice talks about the public interest without limitation that was adopted in 1996 just one year after the Commission issued under Chairman Reed Hundt, a position paper saying that minority and female ownership is an important part of our analysis of media ownership. And so that will be the interpretation up to and until we have yet another Commission or until Congress musters a majority to get something more definite than public interest.

 

Jane Mago:  That's not going to happen.

 

Michael O'Rielly:  Larry, can I answer it slightly different?

 

Larry Spiwak:  Please.

 

Michael O'Rielly:  I agree with the analysis from both Jane and Chris, but I would say what's the -- I don't know if I’m preempting the question you're coming -- but what's the practical impacts of the decision? The three items are the two that the Commission struck down and eliminated and the one that's been modified. Do I believe the current Commission, as its constructed or when they get to full majority, are going to change those? I don't. I don't think that's where they're going to spend their time revisiting newspaper cross ownership or radio television cross ownership. I just don't see that being -- even trying to reinstitute some kind of test of female and minority ownership.

 

      And then you say, okay, what's left? Radio, some of the local television market ownership is left. The national cap remains outside the quadrennial. I would have liked to have gone further. You can see where I wanted to go when we're doing the quadrennials when I was there. But I’m not sure that you're going to get much significance in the next Commission in terms of trying to reinstitute this. I don't see them putting the three rules back in place that have been modified and changed and eliminated. And then I don't see them ever approving, the current Commission, ever approving any further change, just like their last many democratic commissions didn't approve any changes. So it's kind of, it is what it is, and until we got to another Commission where there's a completely different mindset, a different administration, then I think this is where we are. That's the practical impact of the case, I would say.

 

Larry Spiwak:  Well, let me ask all three of you sort of a slight variation of this. Going back to the phrase that Chris has raised very often during our conversation, the notion of the predictive judgement, Chris. The Third Circuit, in its dissent, said look, the quadri review is supposed to be an iterative process. So if you get rid of the rules, then in three and half or four years, I guess is what it is, you then can have data. You can then construct counterfactual and look and see if there is an effect. But given where everything is with this case, do you think they're actually going to try and actually look at data? Or are we back to the predictive judgement problem? I doubt there's going to be that much data happening in two and a half, three years. Jane, what do you think?

 

Jane Mago:  I think that's right. I don't think there's going to be much data that's going to come about. But I also agree with what Mike just said. I don't see any possibility that this Commission has any interest in reinstating the newspaper cross ownership rule. I think that one took a long time, but I think it's gone. The radio television cross ownership may be something, but I can't think of why that would be either. So it seems to me that this Commission will look at what they see happening as a result of these rules, but I actually don't think it's going to be much.

 

Michael O'Rielly:  For the record, I'd just like to know that I think there's a very strong case to be made for getting rid of the newspaper broadcast cross ownership rule and --

 

Jane Mago:  - has been for years.

 

Chris Wright:  Let me give you a hypothetical [crosstalk 00:43:30]

 

Larry Spiwak:  Okay.

 

Chris Wright:  Can I give you a hypothetical?

 

Larry Spiwak:  Sure.

 

Chris Wright:  Over the next two years, there is massive consolidation, and the FCC looks at the data and says my goodness, minority ownership, by all account, went down from eighty percent to one half of one percent and female ownership was the same. Should the Commission do something? Or would the Commission -- would this Commission do something assuming it has five members? I think it would. I don't think any dramatic change like that is liable to happen, but who knows.

 

Jane Mago:  But is doesn't have to be in the form of ownership rules, which I think is one of the points that has been made here is that yes, the Commission should look at these things. The Commission should try to take action, and in fact the Commission did, and oddly in this case, with the incubator order, it was the Third Circuit that killed the incubator order which made no sense. So what have you got going forward is that it seems to me you have to look at the practical effects of it as Mike said.

 

[Crosstalk 00:44:43 - 00:44:48].

 

Michael O'Rielly:  I agree to Chris's point in terms of the hypothetical. Just being more practical, I would just say I don't anticipate a bunch of broadcasters buying newspapers. So see that being hard, and I think even -- and they have, as Larry just pointed out, the license transfer in the local market combining a one and a two, I think, is probably not going to be in the cards. A three and a four is going is probably a tough sell. Maybe in this Commission there'd be some that through depending on the circumstances, and they'll have complete deference in that universe. So I just don't see a scenario where they want to undo what's -- and try and reinstate some of those things when they have enough authority to deal with some of it elsewhere. It just seems like a unnecessary time suck given where the market is today. Nobody wants newspapers.

 

      And then the solution to James point is ipse dadon (sp) . If there is a remedy to be had, the solution isn't to reinstate the rules, it is to look at other mechanisms. And the incubator, it does have its flaws in the sense that if you're considering its impact or the rule on television, it's a radio incubator. So yeah, there's probably some fixes that needs to be done, but the remedy should be considered different that just reinstating the old rules in my mind. And I think that would bear out in terms of -- it's been so long since that was the remedy in the '70s in most of these instances, and they didn't make sense then, much less now.

 

Chris Wright:  So I just have to note that I read a lot of argument and briefs in the case about how terrible these rules were and how they were preventing a whole lot of good things from happening. So if there's any merit to that, there is going to be some consolidation, right?

 

Michael O'Rielly:  There'll be some, I agree, and I think it's strategic. Deals are possible, but I've talked to broadcasters during my time and asked them, "How many of you are going to buy newspapers?" and not a lot of hands go up.

 

Jane Mago:  The horse left the barn on that one a while ago.

 

Larry Spiwak:  Well, let me ask you this because of course it all brings it all back to this. Let us assume -- and it's great hearing Mike's political insight on this -- but as both laws and sausage shall inquire, neither are made. Let's just assume for the sake of argument that the Commission does, the politics are so much -- these are strange times we're all living in -- and they feel compelled to do something or even just issue a formal [inaudible 00:47:23] no, we're not going to issue rules.

 

      Okay, so here's the big question. What's the over/under that the Commission wants to keep it away from the Third Circuit, right? How do we --

 

Jane Mago:  Ninety-nine one?

 

Larry Spiwak:  Yeah. Yeah. How do you keep -- if it heads back to the Third Circuit with the lottery, is it deja vu all over again? This is how my brain works. I just see the endless loop of oh my god, we're back to the Third Circuit. They're vindictive again. They're all back to the sole production. Yes? No?

 

Jane Mago:  You can't have the same panel again. That would be way too much of a coincidence. The panel, even if it goes back there, it should be a different panel. Hopefully somebody's retired, maybe, but --

 

Chris Wright:  - From your mouth to God's ear, Jane [laughter].

 

Michael O'Rielly:  I don't see how you can read that decision and argue that Third Circuit still has jurisdiction over the case, or they can try to cert it. And the idea that in a lottery, that would be like the worst luck for the Commission is spinning the -- the ping pong balls in terms of -- I would imagine it goes back to D.C. Circuit which had a piece in the recent case, and it was then jumbled into the Third Circuit. I'd have a hard time thinking the Third Circuit gets its muddy paws on this again.

 

Jane Mago:  Well, it could by virtue of the lottery process. If you have the multi-circuit -- whatever that thing is called -- it could wind up there, but to be at the same panel, I think, would just be way, way too much.

 

Chris Wright:  What happened, at least a couple of the other ones, actually the ping pong ball landed somewhere. There was --

 

Jane Mago:  - Oh yeah. And it landed in the D.C. Circuit one of the times that I was dealing with it.

 

Chris Wright:  [crosstalk 00:49:10] The courts are of two minds, and one of which is well, any court ought to be able to read the prior decision and judge the agency's order gaps. But the other is three judges that have invested a lot of time and learning about an area should take advantage of that experience and not require other judges to spend a whole lot of their time doing it too. I, as lawyer in private practice, I'm very careful and determine which situation is best for my client before deciding whether we think transfer is permissible or not. But I honestly don't know if sort of a pure, public interest tack -- there is some merit to both of those positions.

 

Michael O'Rielly:  But doesn't the decision just scream out you got it wrong Third Circuit? It's very clear that the court in a 9-0 decision, and who knows where the lines would have broken down if -- were there more votes for a Thomas opinion if they wanted to do a 5-4 instead of a 9-0? That's unclear, right?  And so that's what you'll never see, and they'll never talk about. But it's hard. It's very hard to see where the Third Circuit says yeah, we'd like this case again. That was a great experience. We'd love to do this again if we could. They got, rightfully in my opinion, spanked in this decision. I think that they would be just to move on to other things in their careers would be appropriate action --

 

Larry Spiwak:   - This is a FedSoc panel. We're not bluein on the word blue here, Commissioner. All right, well, we have a few more minutes. Nick, do we have any questions that people want to ask?

 

Nick Marr:  For our attendees, if you've got a question, I'd encourage you to submit them via chat or the Q&A function to Larry, and he'll screen them and take a look. Larry, back to you.

 

Larry Spiwak:  All right. Well, we've about literally two minutes, so let's just go around the horn with some final thoughts. Jane, let's start with you just real quick. What did we learn from this entire process here, and where do we go?

 

Jane Mago:  From the entire process, I think that we've learned that it's a good idea to have different courts review something because I think this one did take way too long. And I do think that that was something that it was unfair to almost all of the parties involved to have it be something that lasted this long. And I think the Supreme Court rightfully took the case. They decided on narrow grounds because they just didn't want to go any further. I'm hoping that that's where we end it.

 

Larry Spiwak:  Okay. Chris?

 

Chris Wright:  So we've got another decision in my mind expanding the amount of deference that agencies give or get rather in a way that doesn't seem entirely helpful to me, like judicial review that's not toothless and this comes pretty close to it. But on the merits of this then we're back in -- well, we're back in the position we've been in in many others. And I suppose one spin is elections have consequences, so a new administration comes in, it ought to be able to have some latitude to do what it likes. On the other hand, it is a little frustrating the things go up and down and you have the feeling it's more due to the predilection of the decision maker rather than the merits of the issue.

 

Larry Spiwak:  Right. Mike, you're up.

 

Michael O'Rielly:  I look at this case as putting a nail into the coffin of a bunch of rules that shouldn't have lived as long as they did. It's the grander piece is jurisdictional authority of the Commission. I probably share some of Chris's concern. But this is just one of those screaming for -- this case was just screaming for resolution, and I'm so thankful that the Court took it up and got to this point. And now, I believe that in the next -- I don't know -- ten years, it'll actually do the rest of the rules, and we can actually recognize what's happening in the marketplace and how competitive it is for broadcasters to survive. So we'll just have to see if that's the case. I'm not optimistic in the near term.

 

Larry Spiwak:  All right. We're at the top of the hour. I want to thank our guests, Jane Mago, Chris Wright, Commissioner Mike O'Rielly, for an excellent discussion. Thank you so much. And Nick, I will throw it to you for final good-byes.

 

Nick Marr:  Thanks very much, Larry. So just a quick thanks on behalf of The Federalist Society to all of you, our panelists, for your time and expertise this afternoon, of course to Larry for helping organize this, run the show. It was on your court, so we appreciate that. Thanks to our audience for calling in, connecting. Sorry we didn't get the questions at the end but do tune in again. Check your emails and our website for announcements about upcoming Teleforum calls, upcoming Zoom programs like this. We've got a few next week covering some different Court decisions. We've got a panel on original public meaning versus framers' intent. So we're covering all kinds of ground next week. Be sure to check that out.

 

      Also save the date, the week of May 17th, we're having our all virtual Executive Branch Review Week conference. We'll have virtual panels, about two to four each day, all week through Thursday, so be sure to check that out on our website as well.

 

      Okay, and with that, thanks all for joining us today. We are adjourned. 

 

[Music]

 

Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.