Two weeks ago, a three-judge panel of the US Court of Appeals for the 4th Circuit heard an oral argument on the challenge by a number of Democratic candidates to the FCC Media Bureau’s March Public Notice which purported to “remind” broadcasters of their obligations to give Lowest Unit Rates not only to ads purchased by political candidates and their own campaign committees but also to Joint Fundraising Committees and Political Party ads when those ads are authorized by a candidate. We wrote here about the issues raised by the Public Notice and the importance of the pending appeal and other requests for clarification, as the Notice did not address many issues crucial to broadcasters, especially when we are in the middle of an important election season. The oral argument and its aftermath at the FCC should have broadcasters regularly refreshing their newsfeeds prior to the September 4 start of the Lowest Unit Charge window for the November election to see how they should be treating these ads during the window. A decision of the court could come down before September 4, and that decision could dictate whether or not broadcasters and local cable operators need to give LUC to political parties and joint fundraising groups when their purchases are coordinated with federal candidates.
At the argument, two of the three judges appeared skeptical of the FCC’s defense of the Media Bureau’s actions, directing many questions to the FCC’s attorney as he attempted to argue that any action by the court was premature, as the Media Bureau action was not a final decision over which the court had jurisdiction given that the full Commission had not had a chance to rule on the application for review by the same Democratic candidates. Those candidates have sought review of the Media Bureau Public Notice by the Commissioners. Historically, it has been rare that courts review decisions of the FCC staff until the Commissioners have first had the opportunity to review the staff decision and decide if that decision was correct.
In this case, counsel for the Democratic candidates argued that the plain language of the law governing court review of FCC decisions did not require that the FCC actually rule on an application for review of a staff decision before the court could review that decision, only that the application for review be filed. And, given the impending September 4 deadline, the skeptical judges asked whether, by not acting by the September 4 deadline, the FCC might have constructively denied the application for review as, without a ruling, the guidance in the Media Bureau Public Notice would stand during the upcoming LUC window (and FCC counsel indicated that he did not expect a ruling by the full Commission by September 4). The oral argument was light on discussion of the substance of the issues raised by the Public Notice, and it was instead much more focused on the procedural questions of whether the court could review the issues at all. Since the argument before the court, unexpectedly, there have been further actions from the FCC and responses to those FCC actions at the court, all seemingly looking to head off a court decision on the case.
First, last week, the Media Bureau denied a Petition for Reconsideration seeking reconsideration or at least clarification of the Bureau’s Public Notice. This petition was filed by TVB, the trade association focused on TV advertising issues. Interestingly, the TVB petition had never been placed on FCC public notice giving the public the opportunity to comment on that petition, as is usual for such petitions. The TVB petition also did not appear to be available in any FCC electronic database and, until a copy was filed with the 4th Circuit in connection with the Democratic candidate’s appeal, many in the industry did not even realize that the petition had been filed.
The TVB petition argued with the premise of the Public Notice, contending that joint fundraising committees and political parties should not get LUC as the wording of Section 315(b) the Communications Act requires LUC only for candidates – and the language in the act about “authorized committees” deals with paperwork and other aspects of candidate obligations, not with who qualifies for LUC. Even if the language of the Act could be read to say that all “authorized committees” get LUC, FEC rules (which Section 315 says governs which committees are considered “authorized”) only considers joint fundraising committees authorized committees for the purposes of joint fundraising, not for other purposes like whether or not they qualify for LUC. As to political parties, the TVB argued that they are not candidates or authorized committees, and thus there is no justification for them getting LUC.
The TVB petition also notes that the Public Notice does not address how broadcasters should treat these ads for other political broadcasting purposes – like reasonable access and “no censorship” (see our articles here, here, and here on the Communications Act prohibition on broadcasters censoring the message of a candidate). The provisions setting out these rights of candidates are established in sections of the Communications Act that do not mention authorized committees at all. The TVB petition also raises constitutional issues as to whether these political obligations are forced speech in violation of the First Amendment or a “taking” of broadcaster’s property in violation of the Fifth Amendment by forcing these discount rates.
The Bureau’s decision last week addresses none of these arguments. Instead, the Bureau determined that the petition was not proper because the Public Notice did not establish any new rules or obligations, and that it was merely a restatement of existing law. As to joint fundraising committees, the Bureau said that TVB should seek relief from the FEC or from Congress by having them redefine which committees are authorized (not addressing in any detail the TVB argument that Section 315 does not grant LUC to authorized committees or the fact that FEC rules limit the purposes for which these committees are considered authorized). As to political party advertising, the Bureau said that the Public Notice merely restated existing practice within the industry, and informal advice given by the FCC staff for years. The Bureau decision suggests that TVB should have appealed that advice when it was first given. Yet the Bureau did not cite a single instance where the FCC put that advice into writing in a rule, case, or policy statement, instead only citing an NAB political advertising guide that had mentioned that advice. How an appeal of an NAB guide or informal advice that many broadcasters may never have heard of could be appealed was not addressed in the decision.
Nor did the Bureau’s decision address the contention raised by the Democratic candidates in the 4th Circuit argument that, until the Supreme Court decision this summer that allowed political parties to spend unlimited amounts of money in coordination with federal candidates, the amount of coordinated spending was so small, and used for so many purposes, that any informal advice that such spending on ads was subject to LUC was not worth the time and expense for broadcasters to challenge. The Bureau did say that any broadcaster who thought a particular request for LUC was improper could refuse to run that ad, and the issue would be resolved by the FCC on a complaint-driven case-by-case basis. But that would involve a broadcaster taking a regulatory risk if they take a position that appears to contradict the guidance in the Public Notice.
This appears to be not the only action that the FCC will be taking in the coming days. Earlier this week, on the FCC’s list of “items on circulation” (draft orders written by Commission staff that are being reviewed by the Commissioners for final approval), there appeared an item dealing with LUC. In a filing with the court, the FCC lawyers identified this as an action by the Commissioners that would deny the Democratic candidate’s application for review on grounds that appear very similar to those used by the Bureau in denying the TVB petition for reconsideration – that the Public Notice was not an action that could be reviewed as it did not take any action but just reminded broadcasters about existing policies, and that the application for review was not the proper mechanism to change existing FCC rules and policy. In other words, the FCC’s view appears to be that existing rules and policy should only be changed through a rulemaking process – which had not been initiated in this case.
In the court case, the FCC has suggested that this imminent FCC action will moot the pending appeal, as the Public Notice will no longer be a proper subject of appeal. The suggestion is that the pending action should be dismissed by the court, and a later appeal could be filed challenging the full Commission’s action – presumably after the election, as any new appeal would not be ripe for court consideration for months, and rules for the election should not be changed in the middle of the election. Counsel for the Democratic candidates has of course opposed this suggestion – arguing that none of these procedural moves by the FCC change the substance of the FCC’s decision or the issues before the court, and urging the court to decide the case before the September 4 start of the Lowest Unit Charge window in the run-up to the November election.
So, with the September 4 start of the LUC window only two weeks away, broadcasters need to be watching developments carefully to determine who will be entitled to LUC during the window. With the Supreme Court decision that we wrote about here eliminating the restrictions on candidates coordinating with political parties on spending on political advertising, and the Media Bureau’s Public Notice saying that joint spending by parties and candidates is entitled to LUC, many more players could demand cheap political ads. But broadcasters need to be talking to their lawyers about these rulings, as even if the court leaves the Public Notice in place, there is some ambiguity identified in the FCC brief before the 4th Circuit that suggests that not all political party spending is entitled to LUC even if authorized by a candidate – that only spending that is done jointly with the candidate gets those rates. But this statement in the FCC brief does not appear in the Public Notice, providing one more puzzle for consideration by broadcasters. Talk to your attorneys to try to figure this all out, and you should stay tuned for further developments expected soon.