Federal Communications Commission v. Prometheus Radio Project
Oral argument transcript · No. 19-1231 · October Term 2020 · argued January 19, 2021 · the petitioner won
Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court
Advocates
- Malcolm L. Stewart, Deputy Solicitor General, for the petitioner
- Helgi C. Walker, Washington, D.C., for the petitioner
- Ruthanne M. Deutsch, Washington, D.C., for the respondent
Transcript
From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.
Chief Justice Roberts: We will hear argument first this morning in Case 19-1231, Federal Communications Commission versus Prometheus Radio Project, and the consolidated case. Mr. Stewart. ORAL ARGUMENT OF MALCOLM L. STEWART ON BEHALF OF THE PETITIONERS IN 19-
Malcolm L. Stewart: Mr. Chief Justice, and may it please the Court: Section 202(h) of the Telecommunications Act of 1996 reflects Congress's conclusion that in light of intervening competitive developments, broadcast cross-ownership restrictions adopted in an earlier era may no longer be warranted. To ensure that such restrictions do not remain in force simply through inertia, Congress required the FCC to reexamine those rules every four years and to repeal or modify any rules that no longer serve the public interest. After reconsidering its ownership rules, in accordance with Section 202(h) as 1 mandate, the FCC determined in 2017 that its newspaper, broadcast, and radio television rules should be repealed entirely and that its local television rules should be relaxed. The Commission explained that the profusion of new media outlets, particularly through cable and the Internet, alleviated the -- the viewpoint diversity concerns that had originally justified the restrictions. It further found that the rules disserved the public interest by preventing economically efficient combinations that would provide consumers better broadcast service. The court of appeals did not find fault with that analysis. Indeed, the court in 2004 had sustained the FCC's determination that the blanket newspaper/broadcast cross-ownership ban no longer served the public interest. The court nevertheless vacated the FCC's rule changes on the ground that the agency had not adequately assessed the changes' likely effect on minority and female ownership levels. The court's elevation of that single factor has no basis in the governing statute, and the court failed to show adequate respect for the agency's 1 predictive judgments and its balancing of competing policy objectives. The Third Circuit's judgment should be reversed.
Chief Justice Roberts: Mr. Stewart, was the FCC required to consider the impact on minority and female ownership in the 2017 reconsideration order?
Malcolm L. Stewart: We don't think anything in the statute required the FCC to consider that factor. The court of appeals, in what we refer to as Prometheus III, its prior decision in this line of cases, had included a footnote that directed the FCC, when it next re-evaluated its cross-ownership rules, to consider that factor. And the analysis that the FCC did in the reconsideration order was in compliance with the court's mandate. But --
Chief Justice Roberts: So it could have --
Malcolm L. Stewart: -- we don't think --
Chief Justice Roberts: -- it could have said nothing about that at all in -- in changing the focus of its regulations?
Malcolm L. Stewart: Yes. Historically, when the Commission has adopted cross-ownership rules 1 of various sorts, it has been to promote viewpoint diversity and -- and localism, to ensure that there is as much of a plethora as possible of distinct voices within the local community. And it has not historically taken into account impacts on minority and female ownership in conducting that analysis. And nothing in 202(h) would have required the Commission to start doing that in its quadrennial reviews.
Chief Justice Roberts: What scrutiny would apply when the Commission simply shifts priorities? Let's say that there were -- was consideration of female/minority ownership and the -- cross-ownership rules and it just decided, well, we think the latter is more important than the former, so we're going to focus solely on the -- on the latter?
Malcolm L. Stewart: I think it's really rational basis review; that is, if the FCC had decided to adopt an explicitly race- or gender-conscious standard, that is, give a preference to members of racial minorities or to women as such, then it would be required to satisfy heightened scrutiny, but it would be no 1 --
Chief Justice Roberts: Thank you, counsel. Justice Thomas.
Justice Thomas: Thank you, Mr. Chief Justice. Mr. Stewart, you indicate that the landscape in the area of viewpoint diversity has changed over the years. Could you talk a bit about that? Particularly, I'm interested particularly in the effect mentioned in your briefs and some of the others with -- as a result of some of the new Internet-based platforms.
Malcolm L. Stewart: I -- I think the idea is that when the rules were first adopted, in many local communities, there might be three broadcast stations and one local newspaper and -- basically, four independent voices within the community providing local news coverage and -- and -- and other forms of coverage. And if two of those outlets were owned by the same entity, that would be a substantial diminution in potential viewpoint diversity. Now, when you have a plethora of 1 Internet-based platforms, cable stations that can also provide local news coverage, the reduction in viewpoints within the broadcast sphere specifically is not going to be nearly so significant in light of the profuse -- profusion of different viewpoints that will be available to the consumer.
Justice Thomas: So do you have -- is there any sort of structural program or requirement such as we have here that is specific to these alternative platforms?
Malcolm L. Stewart: There really -- we really are not talking in this case about regulation of the Internet or regulation of cable. I think the justification for enhanced regulation of the broadcast media has always been that the broadcast spectrum is scarce, not as many people can broadcast on the frequencies as would like to, and, therefore, it's necessary to have a federal agency that allocates the spectrum and decides how it can best be used to serve the public interest. And there -- there isn't the same sort of need with respect to cable and the Internet because one person's voice doesn't crowd out 1 another's.
Justice Thomas: Thank you.
Chief Justice Roberts: Justice Breyer.
Justice Breyer: I'm thinking of it solely as a -- the anti-merger part, in -- in anti-merger law, merger law generally, I think, has a theory, and the theory is, beyond a certain point and other things being equal, you have fewer companies in a market, the harder it is to enter, and it's particularly harder for smaller firms. And, here, smaller firms are heavily correlated or more likely to be correlated with women and minorities. All right? The opposite view, which is what the FCC has now chosen, is -- is they want to move or allow to be moved towards more concentration. So what's the theory that that wouldn't hurt the minorities and women or smaller businesses? What's the theory the opposite way, in other words? I'm not asking for data. I'm asking for a theory.
Malcolm L. Stewart: Well -- well, let -- let me take the -- the two points you made in -- in 1 order. The first is, with respect to possible advantages to small entities, the FCC has devised other programs, like the incubator program and the eligibility -- eligible entity definition, that are intended to give certain regulatory advantages to small entities. And -- and these may -- those rules may incidentally benefit female and minority owners or prospective owners even though they're not limited to -- to those people. The second thing is the -- the theory behind what the FCC did was in part the data don't show it, but in part, with respect to some of these rules, the intuition really isn't there once you unpack things. For example, with respect to the newspaper broadcast cross-ownership rule, the rule that a single entity can't own both a newspaper and a -- a broadcast station, the FCC found that if that rule was eliminated, the most likely consequence is that broadcast stations would buy newspapers rather than the reverse, because --
Justice Breyer: Thank you.
Chief Justice Roberts: Justice Alito.
Justice Alito: Mr. Stewart, you said earlier that the Commission was not required by the statute to consider minority and female ownership, but the Commission did that. And, therefore, could we reverse the court of appeals on the ground that the Commission simply wasn't required to consider this factor at all, and does it matter that the panel had previously indicated that the Commission had to consider that factor?
Malcolm L. Stewart: I -- I think, if you concluded that the statute actually barred the Commission from considering that factor, you could reverse the court of appeals on that basis. I think, if you simply concluded that the Commission was either allowed to do it or not as it chose, you might think that you need to analyze the Commission's assessment of that factor at least a little bit in light of the fact that the Commission analyzed it. But even the court of appeals didn't say that the Commission ignored the weight of the data or that the data affirmatively demonstrated that female and minority ownership 1 levels would be reduced. It simply said the Commission hasn't amassed enough data to reach an informed conclusion one way or the other. And -- and we think that was certainly error, that most of the --
Justice Alito: Well, on -- on -- on that point, the Court clarified in Fox Television that the APA doesn't require "obtaining the unobtainable" when it comes to data supporting a decision but that the agency might be required to analyze data that "can be readily obtained." There's a big gap between those two poles. Where should we draw the line?
Malcolm L. Stewart: I -- I don't -- I think, here, it's not a matter of the data could readily be obtained. That is, the deficiencies in the data don't result from the agency's current data collection practices. What the agency was trying to do was assess the potential consequences of relaxing the ownership rules by looking at arguably analogous regulatory changes that had occurred in 1996 and 1999 and asking what happened after that. 1 And so the deficiencies in the data are really deficiencies in the data that predated those regulatory changes, and it --
Chief Justice Roberts: Justice Sotomayor.
Justice Sotomayor: Mr. Stewart, I'm -- I'm a bit confused. It seems to me that the FCC for decades has been saying that minority and women ownership is in -- consideration of it is in the public interest. And I don't see anything in the ruling below that was subject to review by the Circuit that said otherwise. It may have said that it didn't think the changes would affect that issue. It said other things, but I don't think the FCC has ever disavowed that that -- consideration of that factor should be given in its review.
Malcolm L. Stewart: The agency has never -- has -- has frequently said that this is a factor that may take -- be taken into account in its public interest analysis generally.
Justice Sotomayor: All right. So may --
Malcolm L. Stewart: And --
Justice Sotomayor: Let's stop there. That's exactly what it said. And I saw the circuit courts saying that's what you said, but your consideration was inadequate because you really didn't -- you didn't explain it. And we have a legion of -- couldn't adequately explain it. We have a legion of cases that say you don't have to rule in favor of one point of view or another, but when you're rejecting something, you should give it adequate consideration. Isn't that what we're judging?
Malcolm L. Stewart: I -- I -- I think there are two things I would say about that. The first is that, although the agency has historically looked at enhanced female and minority ownership as a goal to be achieved through some means, it has not historically looked at that criteria as a basis for its cross-ownership restrictions. In adopting those restrictions, it's looked at other factors. The second thing is that the court of appeals chided the agency not for conducting an inadequate analysis of the data that were available but for having inadequate data. 1 And I think we've made a strong showing that there were no better data available with respect to the -- the demographic composition of the ownership group pre-1996, pre-1999.
Justice Sotomayor: Thank you, counsel.
Chief Justice Roberts: Justice Kagan.
Justice Kagan: Mr. Stewart, if I could continue in that vein, as -- as -- as I understand it now, you're saying that female and minority ownership has not really been a factor in 202(h) determinations, but I -- that's not the way I read your brief. And I think it's not the way I read past actions by the FCC under 202(h), so I'm -- I'm wondering, what are you saying here? Are you saying that this is a new thing that those things are not considered or that they've never been considered under 202(h), which is not what your brief says? What -- what are you saying?
Malcolm L. Stewart: I mean, what I was really talking about was the era well before Section 202(h) was enacted in 1996, the era back in 1975, for instance, when the Commission first 1 adopted the newspaper broadcast cross-ownership ban and -- and the years since then when it had retained that ban and when it had adopted rules dealing with radio and television cross-ownership. In -- in that era, the rules were justified by considerations of viewpoint diversity. But what the Commission meant was it's better to have more independent outlets in the community rather than --
Justice Kagan: I guess I'm still not really understanding you, Mr. Stewart, so I'll just ask, in -- in -- in your brief, you say the agency has traditionally treated this form of broadcast diversity, meaning minority and female ownership, as an element in its multifactor public interest analysis. Are you still sticking to that statement?
Malcolm L. Stewart: It -- it -- it has often said that, and it has tried to devise ways that that objective may be achieved other than the cross-ownership rules. So, for instance, with the --
Justice Kagan: So --
Malcolm L. Stewart: -- eligibility --
Justice Kagan: -- okay. If you look at this, in this rule-making, were you saying, look, we don't think that the changes in these rules will affect female and minority ownership, or were you saying something more like we don't have evidence of this and we're not going to let speculative arguments get in the way of what we want to do otherwise?
Malcolm L. Stewart: We were saying the evidence is fragmentary, but based on the evidence we have, our best assessment is there will not be a substantial effect. And the mere possibility that there could be such an effect is not a sufficient basis for foregoing regulatory changes that we would otherwise deem to be very desirable. But --
Chief Justice Roberts: Justice -- Justice Gorsuch.
Justice Gorsuch: Good morning, Mr. Stewart. The parties dispute the propriety of the Third Circuit holding onto this case and all of its various iterations for the last, I don't know, 17 or so years. I'm curious what the 1 government's position on that is.
Malcolm L. Stewart: In -- in -- in succeeding stages of this litigation, there have been petitions for review filed in other circuits, and there have then been requests to transfer the cases to the Third Circuit. The government in the past has not opposed those requests. I think we're a little skeptical that the Third Circuit's repeated statements that it is retaining jurisdiction really have operative legal effect. That is, if the next time around a petition for review is filed in some other circuit that would otherwise be an appropriate venue, that circuit can decide for itself whether to transfer the case to the Third Circuit. But we don't think that that circuit would be under an obligation to do so simply because the Third Circuit has included this language about retaining its -- retaining jurisdiction in its prior order.
Justice Gorsuch: Thank you.
Chief Justice Roberts: Justice Kavanaugh.
Justice Kavanaugh: Thank you. And good morning, Mr. Stewart. A 1 follow-up on Justice Sotomayor and Justice Kagan to make sure I'm clear. Under the statute and the public interest standard, does the FCC have to consider the effect of relaxing the rules on women and minority ownership?
Malcolm L. Stewart: No, we don't believe so. The -- the fact that it is a public interest consideration that could be taken into account in making other sorts of decisions doesn't mean that we have to consider it in making every single regulatory decision we make, including relaxation of the cross-ownership rules.
Justice Kavanaugh: Do you agree that the FCC did consider it here?
Malcolm L. Stewart: It considered it, and if the FCC had concluded there was likely to be an adverse impact on female and minority ownership, it would then have had to decide how do we balance that against the identified benefits of the rule.
Justice Kavanaugh: Having --
Malcolm L. Stewart: The FCC never got to that point.
Justice Kavanaugh: Having considered it, doesn't the FCC have to justify how it 1 considered it?
Malcolm L. Stewart: I think the -- the very most you could say that the FCC has to do is provide a reasonable, not necessarily a view that the court deems correct, but a reasonable view of the evidence that is before it. It doesn't have to amass additional evidence simply to be able to pronounce with a higher degree of confidence.
Justice Kavanaugh: And a follow-up on Justice Breyer's question. What's the theory for why it wouldn't hurt women and minority ownership? The theory he asked, can you continue your answer there?
Malcolm L. Stewart: Yes. With respect to newspaper/broadcast cross-ownership, for instance, the -- the Commission found that the most likely consequence of eliminating the ban is that broadcast stations will buy newspapers rather than the reverse because the newspaper industry is in such trouble. And if a broadcast station buys a newspaper, that doesn't affect any form of centralization or consolidation of ownership within the broadcast industry. The existing 1 broadcast owners remain the same. It's just one of them has bought a newspaper and that may allow it to achieve economies of scale and provide better service to the community.
Justice Kavanaugh: Thank you.
Chief Justice Roberts: Justice Barrett.
Justice Barrett: Mr. Stewart, I want to go back to the questions that Justices Sotomayor and Kagan were asking you. I understood your brief to be saying that the FCC -- or to -- to be conceding that the FCC had long taken minority and women ownership into account, but then you pivoted a little bit and said that it took into account because the Third Circuit's opinion required it to. And I -- I wasn't entirely clear which position you had settled on. So could you clarify that for me?
Malcolm L. Stewart: I think what I meant to say was it -- it has long identified minority and female ownership, an increase in ownership levels or a -- a decrease in the current underrepresentation, as a good that would serve the public interest. 1 It has not historically taken that particular public interest factor into account in determining whether particular cross-ownership restrictions specifically should be adopted or retained. For example, it achieved -- attempts to achieve that goal through other means, such as preferences through small businesses that are race- and gender-neutral but may incidentally help minority and female owner -- owners. Now --
Justice Barrett: Mr. Stewart, can I just interrupt and ask another question before my time elapses? Do you see a difference between a stated goal of enhancing minority and female ownership and not harming minority and female ownership, and if so, which is the FCC's?
Malcolm L. Stewart: I -- I think it is both. I think the FCC would be cognizant of either argument -- again, outside the cross-ownership context, either of arguments that an existing regulatory change is good because it will increase minority and female ownership levels or a proposed regulatory change is bad because it would decrease them. I think the FCC would be open to 1 either form of argument. And, again, what we're talking about is race- and sex-neutral measures, not race or sex preferences.
Justice Barrett: Thank you, counsel.
Chief Justice Roberts: A minute to wrap up, Mr. Stewart.
Malcolm L. Stewart: Thank you, Mr. Chief Justice. I -- I think it's easy to lose sight of what extensive analysis the FCC did here because so much of that analysis is undisputed. The FCC concluded that because a variety of alternative media voices are now available to consumers, the viewpoint diversity concerns that originally prompted the cross-ownership rules were far less acute today. The FCC also explained that if the ownership restrictions were repealed or relaxed, owners could achieve economies of scale. For instance, a broadcast station, by buying a local newspaper, could use resources with respect to the gathering and the dissemination of local news on both platforms, and it could thereby provide better broadcast service to its consumers by using the resources of the 1 newspaper. Thank you, Mr. Chief Justice.
Chief Justice Roberts: Thank you, counsel. Ms. Walker. ORAL ARGUMENT OF HELGI C. WALKER ON BEHALF OF THE PETITIONERS IN 19-
Helgi C. Walker: Thank you, Mr. Chief Justice. May it please the Court: In this case, the FCC decided that broadcasters should not have to operate under ownership restrictions dating back to the Roosevelt administration. I'd like to focus on the statutory reasons why that was lawful. 202(h) was meant to drive real reform with a focus on competition. Here, the Commission's statutorily required findings that the rules are no longer in the public interest as a result of competition are unchallenged. Yet, the Third Circuit vacated the order because the Commission failed to adequately consider minority and female ownership. The statute does not say one word about that issue. And the APA does not require the FCC to consider it either. The Third 1 Circuit has no basis, other than its own policy preferences, to make that a mandatory, much less controlling, factor in all 202(h) reviews. The FCC properly did the job Congress gave it. That is what matters, and the order can and should be upheld on that ground. I welcome the Court's questions.
Chief Justice Roberts: Ms. Walker, are you saying that it would have been arbitrary and capricious for the Commission to consider the impact on minority and female ownership?
Helgi C. Walker: No, but it was not required, as you asked Mr. Stewart, Mr. Chief Justice. And, in fact, under the Commission's analysis of the order, the outcome of the minority and female ownership discussion couldn't have changed the outcome because the FCC decided, for instance, that the newspaper/broadcast cross-ownership rule was no longer in the public interest and had to be repealed before it even got to the minority and female ownership discussion.
Chief Justice Roberts: Well, given that the Commission had considered minority and female ownership for some time, wasn't it under 1 some obligation, under State Farm, for example, to explain why it was not focusing or -- or even weighing that interest in the 2017 order?
Helgi C. Walker: No, Your Honor, because the Commission never relied on minority and female ownership as a basis for the structural ownership rules, which are the subject of 202(h) and what this entire case is about. The Commission has alluded to that as a policy but never in the context of these rules. In fact, it has said the opposite, that these rules are an inappropriate vehicle because they don't really work to promote minority and female ownership. It said that in the 2014 review, in the 1985 order, and in the order on review here.
Chief Justice Roberts: Is the -- to what extent, if any, do you -- does your position -- inconsistent -- is your position inconsistent with the Solicitor General's position?
Helgi C. Walker: On the question of what the Commission has historically done, not inconsistent. We're just being more specific to say that policy has never been advanced with 1 respect to the ownership limits. And I heard Mr. Stewart say this morning that he agrees with that. We would like the Court to resolve this case on statutory grounds and not merely decide that the Commission's consideration of the minority and female ownership issue was adequate.
Chief Justice Roberts: Justice Thomas.
Justice Thomas: Thank you, Mr. Chief Justice. Ms. Walker, to follow up on your last answer, can you think of any example of -- of an instance in which the FCC has used a structural ownership rule such as this one to advance minority or female ownership?
Helgi C. Walker: I do not believe, after my extensive work on this case, that there is a single example of that. And, again, the Commission has said the exact opposite. It has said that structural ownership limits are not an appropriate means to promote minority and female ownership because there is no evidence or any demonstrable indicia that those rules actually 1 promote those interests. The Commission has therefore chosen direct means, Justice Thomas, like tax certificates and distress sales. That's how the Commission has promoted those interests. And it just has never done that ever with respect to the structural ownership limits, and that is what this case is about.
Justice Thomas: So do -- what do you think, other than diversity of viewpoint, what other interests are being advanced by this rule?
Helgi C. Walker: The traditional public interest rationales for these rules, Your Honor, are viewpoint diversity, localism, and competition. Those three rationales underlay the adoption of the rule, and the Commission has consistently relied on those. We think those are appropriate factors, but on our proffered reading of the public interest in this statute, we don't think the Commission or commenters can draw in brand-new rationales as an excuse to keep outdated rules or, worse, to make more rules. That turns the statute completely upside down.
Justice Thomas: So have this interest 1 -- have these interests become somewhat less important with the rise of other platforms, particularly the Internet platforms?
Helgi C. Walker: Yes, Your Honor. And -- and I think -- I think your question draws out the fact that the broadcasters' competitors, all these new platforms, all these new social media formats, are completely unregulated, yet broadcasters labor under these rules that literally go back to the 1940s. That makes no sense and is extremely unfair as a competitive matter, which is why the Commission reasonably decided to free broadcasters of these archaic rules.
Chief Justice Roberts: Justice --
Justice Thomas: Thank you.
Chief Justice Roberts: -- Justice Breyer.
Justice Breyer: Thank you. I'm going to oversimplify. But earlier commissions, before this particular last effort, I read it as saying, look, television, radio, newspaper, they're all in the business of providing news. They're all somewhat competitive. And we want to stop them from being concentrated, so we have 1 our rules. And one thing about those rules, one thing only, is that they will not hurt small businesses. They will tend to help small businesses enter more easily, and small businesses tend to be correlated with women and minorities. Now we have a change, and the change seems to be that we don't see any effect, okay? Now, normally, when an agency changes its rules, it has to explain why. Just a question of explaining it. Well, it's the same question I asked before. What's the theory? Where is the explanation?
Helgi C. Walker: Well, with respect, Justice Breyer, the earlier Commission never said it was keeping the rules for the purpose of promoting minority and female ownership.
Justice Breyer: No, I'm not saying for purpose. I am doing it the opposite way. There is no negative effect on small businesses. In fact, it's positive. And looking at the public interest generally, there's no negative, and it's a positive for women and minorities. Then they change. Okay? Where's the 1 explanation?
Helgi C. Walker: Well, but, with respect, Justice Breyer, I don't think the Commission ever said what you are hypothesizing. They -- they have never said even in the 2016 order that predated the reconsideration order that the rules would help. The structural ownership rules, it's important that we be specific, that that would help small businesses, new entrants, minorities and -- and women by correlation. They -- they did say that with respect to the diversity order, that the Third Circuit without any explanation threw out, but the 2016 order that predated the order on review actually never said that the ownership limits would advance the interests of even new entrants.
Chief Justice Roberts: Justice Alito.
Justice Breyer: Thank you.
Justice Alito: To paint a picture of what this case means in real-world -- real-world terms, can you give me a concrete example of some beneficial development that would occur if the Commission's rule is sustained but that will be prevented if it is not sustained?
Helgi C. Walker: For example, Justice 1 Alito, a local broadcaster might buy a failing newspaper. That would be a very good thing. As the record shows and many of our amici explain, newspapers have been in a downward spiral for decades. A local broadcaster could buy that newspaper, help get it back up and running, and be providing more local news and more local content for the community. That would be an excellent thing that would not be allowed to happen if the Third Circuit is not reversed. And on that point, Justice Alito, if I might, it's important to note that Respondents have not even challenged the Commission's statutorily required competitive findings. Why? Because there really is no serious argument that these rules still are necessary.
Justice Alito: Well, is that a realistic possibility? Can you point to a real-world example of a local -- a local television station buying a failing newspaper and keeping it in business?
Helgi C. Walker: I believe the amicus brief of the affiliates lays out in detail a lot 1 of examples where television stations have been able to do that or buy another television station in the same market, pool resources, and create more local programming. So I'd refer you to those amicus briefs. But, Justice Alito, another real-world point is that, for instance, Amazon gets to own The Washington Post today. Nobody thinks that's the end of democracy. It's surely not the end of democracy if a local broadcaster can buy a local newspaper and keep it alive.
Justice Alito: Thank you.
Chief Justice Roberts: Justice Sotomayor.
Justice Sotomayor: Counsel, the way you want us to rule requires us to go through the FCC's history with this issue, starting presumably in the 1970 and now going over close to 50 years practically. You're encouraging us not to look at what might be a simple issue, which is: Was the explanation given adequate? I don't know what -- why either you or the Solicitor General need to go that far. Could you explain to me if there's a 1 simpler reason why we should go to the more complex reason?
Helgi C. Walker: Well, I actually think the statutory reason is not as complex, but I'll get to that next. The reason why we, the broadcasters, are asking for statutory relief is because it took us 17 years to get to this Court, 17 years of litigation where the Third Circuit was distorting the statute the entire time. We badly need a course correction, and I think the lower courts --
Justice Sotomayor: Well, but part of that problem is not with what the Third Circuit did. It's with what the government did. The government was acceding to the Third Circuit's jurisdiction up until this moment, meaning at every moment in which there had been a -- a motion to transfer the case, the government agreed to it.
Helgi C. Walker: Yes, looking at the --
Justice Sotomayor: So I don't think you can blame the Third Circuit or the fact that it retained jurisdiction for what the government encouraged.
Helgi C. Walker: Well, it was the Third Circuit's dilution of 202(h) that's also the problem, but you're right, Justice Sotomayor, we've not been aligned with the government at all steps, and that's why we're here trying to protect those interests of --
Justice Sotomayor: So I put another question in where have -- you have not told me or given me a line to draw as to when it's appropriate or inappropriate for a circuit to retain jurisdiction in a complex case.
Helgi C. Walker: I don't think you need to draw a hard line, but, here, it was clear we're way outside of anything appropriate. One panel of the Third Circuit has retained jurisdiction for 15 years over four successive, separate quadrennial review orders. That's excessive, I think, by any standard.
Chief Justice Roberts: Justice Kagan.
Justice Kagan: Ms. Walker, I'd like you to assume with me that in applying its public interest standard, generally, the FCC has always thought of -- of -- of one factor, not the only factor, obviously, but one factor is minority and female ownership. 1 And I'd further like you to assume, and I understand that you can test this as a factual matter, but I just want you to assume with me now that that historic practice has been true in the 202(h) context, as well as in rule-making or license-giving or anything else that the FCC does. If you assume those things, what obligation does the -- would the FCC have to say why it was not taking that consideration into account here?
Helgi C. Walker: Well, we think the statute actually would preclude consideration of that factor here even if the Commission wanted to. I draw your attention to our statutory theory, which is that the public interest here has to be cabined in some way. And so we read the statute as asking the Commission to go back to the original public interest rationales for whatever rules they are reviewing under 202(h), and, here, everybody agrees that would not include minority and female ownership.
Justice Kagan: So you're saying that --
Helgi C. Walker: So --
Justice Kagan: I'm sorry, if I just -- make sure I understand. You're saying that even if the -- even -- even though the FCC can use minority and female ownership as a factor in -- in -- in doing rules generally and in giving licenses, when it comes to 202(h) review, they affirmatively cannot?
Helgi C. Walker: Not if it was not an original basis for the rule. And why does that make sense, Justice Kagan? Because it keeps the Commission to the task of reviewing what it has done before, not coming up with new rules or new rationales to even add ownership restrictions.
Justice Kagan: I think your -- your -- your -- well, I think my time is up, so I'll -- I'll quit there.
Chief Justice Roberts: Justice Gorsuch.
Justice Gorsuch: Good morning. I wanted to return to a question Justice Sotomayor raised, and that is, what's at stake here between your rationale and the FCC's? I guess you ask us to rule on the statutory basis. The FCC asks us to rule on its 1 reasoned decision-making basis. I -- I would have thought perhaps a win is a win from your client's perspective, and I -- I -- I -- I'd like to understand why that's not the case.
Helgi C. Walker: Well, as a practical matter, Justice Gorsuch, if this Court doesn't clarify what the statute requires or doesn't require, we're going to be back in this very same morass in the next quadrennial review, the 2018 quadrennial review that's on ice pending the outcome of this Court's decision. If the Court merely holds that the Commission adequately explained a completely atextual factor that the Third Circuit imposed unilaterally on the Commission, we haven't made much practical progress because that might even embolden courts to add other atextual factors. Today, it's minority --
Justice Gorsuch: Well -- well, let --
Helgi C. Walker: -- and female ownership, tomorrow it's --
Justice Gorsuch: -- let me -- let me interrupt you there. I mean, if -- if this quadrennial review is allowed to go forward and the experiment is allowed to play out and data 1 is obtained, presumably, you have confidence in the results, they'll show great public benefit. Why wouldn't that be sufficient today?
Helgi C. Walker: I think the problem -- I think the problem, Justice Gorsuch, is that Respondents' theory of the statute would allow the Commission to add totally new theories as a reason for keeping rules, so we'll never have any regulatory reform, or, worse, tightening the ownership restrictions. Congress definitely did not think that 202(h) was supposed to be a vehicle for tightening the ownership.
Justice Gorsuch: Well, on -- on that, I mean, you know, you -- you play by the sword, you die by the sword. And if you -- if you adopt and permit a statute as broad as public interest, you -- you can't be surprised when it winds up including nothing or everything or something in between.
Helgi C. Walker: But this statute doesn't just say the public interest; it says the public interest as a result of competition. And we've offered a reading that ties that, anchors it in the purpose of the statute, which is regulatory reform. 1 This is not a free-standing reference to the public interest like there is in other parts of the Communications Act and elsewhere in the federal law. It says "as the result of competition." And those words have to mean something.
Chief Justice Roberts: Justice Kavanaugh.
Justice Kavanaugh: Thank you, Chief Justice. And good morning, Ms. Walker. What do you do with the next sentence of the statute, which does refer to "public interest" in isolation?
Helgi C. Walker: That sentence textually links back to the first sentence. The first sentence tells the Commission that it shall determine whether any of the rules are necessary in the public interest as the result of competition. The second sentence tells the Commission what to do if it makes that determination that certain rules are no longer necessary. If it makes that determination, it has to repeal or modify them. 1 So the determination referenced in the second sentence is the same determination referenced in the first sentence, so they textually link to each other, and it would have been pedantry for Congress to have to repeat "as the result of competition" after the words "the public interest" in the second sentence of the statute.
Justice Kavanaugh: Do you agree that if the term is "public interest" in isolation, that an agency has discretion to interpret that to encompass effects on women and minority ownership?
Helgi C. Walker: I think it could, but it never did that here. And so the Third Circuit was wrong to say that that was a requirement under State Farm. And if it is a free-standing public interest standard, Justice Kavanaugh, I think that raises non-delegation problems. We've offered a reading that ties the public interest to the task and the unique context of this particular statute. And NBC says we have to pay attention to statutory context here. And the text, the context, and the 1 purpose of this entire statute all point in the direction that Congress meant this to be a vehicle for deregulation, not more regulation.
Justice Kavanaugh: Thank you, Ms. Walker.
Chief Justice Roberts: Justice Barrett.
Justice Barrett: So, Ms. Walker, given that Congress wanted this statute to be a vehicle for deregulation, not more regulation, is it your position that the word "modify" in 202(h), when it requires the Commission to modify or repeal as part of its quadrennial review, that a modification can never be an additional regulatory requirement?
Helgi C. Walker: Yes, we agree with that reading of "modify."
Justice Barrett: Is it your --
Helgi C. Walker: We think --
Justice Barrett: Oh, go ahead, Ms. Walker. Please finish.
Helgi C. Walker: I am finished. We agree.
Justice Barrett: Okay. Then let's talk about the public interest and how it might affect a repeal or modification of a rule. 1 Let's imagine that the Commission finds that a rule no longer promotes competition but believes the rule promotes viewpoint diversity and localism. In that event, is it your position that 202(h) requires the FCC to repeal or modify the rule?
Helgi C. Walker: No. The Commission gets to balance the traditional public interest factors on our reading of what the public interest means. Those are all three factors that underlie these rules. The viewpoint diversity, competition, and localism, the Commission gets to balance those, but it can't make up brand-new -- brand-new reasons. And I just want to reemphasize, Justice Barrett, that in this order, if you read carefully, you'll see that the Commission had already made the public interest determination required by the first sentence by the time it got to the discussion of minority and female ownership. At that point, the Commission had no choice but to repeal or modify the rules because the second sentence makes that mandatory.
Justice Barrett: Thank you, 1 Ms. Walker.
Chief Justice Roberts: A minute to wrap up, Ms. Walker.
Helgi C. Walker: Thank you, Mr. Chief Justice. Section 202(h) was enacted 25 years ago. Since then, the ownership rules have barely changed. That is not what Congress had in mind. And it took us, as I mentioned, 17 years of litigation to get to this Court. Now that we are here, we respectfully ask the Court to provide guidance on what the statute does and does not require. Absent that guidance, we're going to be stuck most likely in the same morass in the very next review, and Congress's intent could be thwarted for another 25 years. We thus respectfully ask that you clear the way for the statute to finally operate as intended: as a mechanism for meaningful reform, with a focus on competition that does not allow atextual factors to trump the Commission's expressly required competitive findings, which, again, are here completely unchallenged. For these reasons, we ask the Court to 1 reverse the judgment of the court of appeals and instruct it to deny the petitions for review. Thank you.
Chief Justice Roberts: Thank you, counsel. Ms. Deutsch. ORAL ARGUMENT OF RUTHANNE M. DEUTSCH ON BEHALF OF THE RESPONDENTS
Ruthanne M. Deutsch: Thank you, Mr. Chief Justice, and may it please the Court: This is an APA case about whether the agency engaged in reasoned decision-making. The government agrees that promoting broadcast ownership by women and people of color has long been the Commission's own public interest goal, one that is fully consistent with the statute and is not a command imposed by the Third Circuit. The government also agrees that the agency must reasonably weigh all competing aspects of the public interest that it has identified in its quadrennial reviews. The problem here is that the reconsideration order fails this basic requirement of administrative accountability. Based on zero information about female ownership 1 and a nonsensical analysis of badly flawed data on minority ownership, the agency repeatedly assured the public that consolidation would do no harm to either. The government now asks for deference. It says that the uncertainty was acknowledged, prediction is hard, and it argues essentially that because no harm was shown, there was nothing to be waived. But because the no-harm findings here were wholly arbitrary, to defer on this record would only encourage agencies to do sloppy work to avoid making tough choices. Ultimately, if the Commission wants to give less weight to ownership diversity or even abandon the goal entirely, nothing in the Third Circuit's ruling stands in its way. But what the Commission cannot do under time-honored principles of administrative law is mask important policy changes behind such unreasoned analysis. Thank you, and I welcome your questions.
Chief Justice Roberts: Counsel, let's -- let's say the Commission -- there are -- 1 there are sort of two different priorities, you know, priority A and priority B, and the Commission is going along, focusing on priority B, and then, I mean, there's a change in the Commission membership or whatever, and the Commission says, well, we're now going to -- we're now going to focus on A. Nothing to do with the record or findings or inadequacies on -- on issue B. We just think that issue A is more important. How is -- how is that subject to APA review?
Ruthanne M. Deutsch: I -- at the minimum, there needs to be, as this Court said in Fox, an acknowledgment that there's been a change in policy and then an -- an explanation of why. Here, of course, there was no stated change in the policy goal of promoting minority/ female ownership and there were repeated assurances that the deregulatory measures going forward would not harm that goal. And --
Chief Justice Roberts: Is it enough -- is it enough for the agency to say, well, you may have noticed we're no longer talking about B, we're talking about A, and the reason is 1 we -- we think A is more important than B? Is that enough?
Ruthanne M. Deutsch: I don't believe that's enough, Your Honor. I think they would have to say why it was more important.
Chief Justice Roberts: Well, how do you do that, I mean, if they're -- they're, you know -- you know, apples and oranges, but, you know, life is short, they only have so much time?
Ruthanne M. Deutsch: So --
Chief Justice Roberts: And they think cross-ownership is more important than minority and female ownership. Those are two --
Ruthanne M. Deutsch: Well --
Chief Justice Roberts: -- different things.
Ruthanne M. Deutsch: Well, one thing they could have done here, for example, is to say, no matter what the harm to this other long-standing policy goal, which we have said on many occasions that our broadcast ownership rules are to promote -- and I would point you to JA 335 and also the 2002 order cited on 32 of the NAB brief -- they could say, no matter the harm to 1 this -- this goal, it's really hard to measure, it's too uncertain, and we're willing to go forward for these other public interest goals because they are more important, but they did not say that here.
Chief Justice Roberts: Well, if -- if their -- their action focuses on a different set of priorities -- in other words, you -- you seem to be suggesting that as a matter of policy, as opposed to what the record shows about a particular priority, they have to justify a determination that A is more important than B, when reasonable people can differ -- disagree on that. They can't -- they can't just say, you know, yes, this is an -- female and minority ownership is a very important thing, but so is cross-ownership, and we can only -- you know, as I said, we don't have resources to devote to both and we're going to focus on cross-ownership?
Ruthanne M. Deutsch: I think they would also have to say that we're willing to do that no matter the harm to something that we have repeatedly said is one of the goals of these 1 rules.
Chief Justice Roberts: What is the basis for the Third Circuit's ruling you -- if you're going to shift, you have to say that it maximizes the benefit to the priority that you're no longer pursuing?
Ruthanne M. Deutsch: I don't believe the Third Circuit went so far. They said that you had to weigh the effects and left the Commission ample space to weigh those effects and -- and come out in favor of deregulation and balance as they saw fit.
Chief Justice Roberts: Justice Thomas.
Justice Thomas: Thank you, Mr. Chief Justice. Counsel, I'm just a bit confused. Petitioners indicate that in the past, these structural ownership rules simply did not include minority and female ownership considerations. Could you address that? And include in that at what point did those considerations -- I'm not talking about the standalone rules, such as, you know, tax preferences, et cetera, 1 but just these structural rules -- they -- they seem to indicate that these rules are different from those standalone rules on minority and female preferences or diversity.
Ruthanne M. Deutsch: Sure, Justice Thomas. I'm happy to point you to several places. Starting in 1995 in a local TV rule that was -- predated Section 202(h), the Commission recognized that the potential for increased prices from the relaxing ownership limits and concerns considering the ability of minorities and women and committed to studying the effects of that at JA -- and the 2002 order, I guess, is where I would go next. That's on the NAB brief at page 32. The Commission stated how it "had historically used the ownership rules to foster ownership by diverse groups, such as minorities, women, and small businesses." In JA 335, the Commission, again, says that it has a long history of promoting rules and regulations intending to promote diversity of ownership among broadcast licensees, including minority and female ownership-owned businesses, and as explained above, the 1 Commission's broadcast ownership rules help further this purpose. So, while there's not targeted measures, they create the underlying structural -- and I have many other examples, but those are -- those are the highlights. And the federal --
Justice Thomas: Well, what's the difference between what you just said and the idea or the notion that the object of this -- of this rule is to promote a program, a diversity viewpoint, and these other benefits are collateral benefits? And as I hear the argument, the Petitioners suggest that you don't sacrifice or you don't veer away from the central purpose of viewpoint diversity for these collateral benefits, though they may be worthy. What's your response to that?
Ruthanne M. Deutsch: Well, the Commission has talked about fostering diversity by historically underrepresented groups both as a free-standing interest in terms of having fair and equitable allocation of the scarce broadcast spectrum and one that is intertwined and supports the other public interest goals. 1 Not only viewpoint diversity, and there's record evidence on that at JA 335 again, JA 397, but also a -- a -- a benefit to other public goals, like localism and the NAB brief of 23 states puts that evidence there.
Chief Justice Roberts: But can you promote -- I'm sorry to interrupt you, but can you -- what if -- if focusing on the collateral benefits impedes disposing of the primary goal object, which is, again, as the Petitioners argue, viewpoint diversity?
Ruthanne M. Deutsch: If -- if the Commission reached that conclusion after a reasonable weighing, that would be fine. But that simply didn't happen here. There was --
Justice Thomas: Thank you.
Ruthanne M. Deutsch: -- no weighing whatsoever.
Chief Justice Roberts: Justice Breyer.
Justice Breyer: All right. You read the briefs. On the other side, there's an amicus brief that explains, economically speaking, why they want to get rid of the rules. It's a combination of failing-company argument, 1 economies of scale. So they -- they have that before them, the FCC. Now they didn't say they were abandoning the minority/women policy. They didn't say that, or the small business policy. What they said is there's no evidence in this record to convince us that if we do what these kinds of briefs say, that it will hurt our efforts there, and besides, we have two new things called incubator and we have something called eligibility, and we're trying to preserve and encourage minority and women ownership that way. Okay? What's wrong with that? And you heard me ask the other side --
Ruthanne M. Deutsch: Well, they're --
Justice Breyer: -- are they changing their policy? And the other side says no, no, there's nothing you'd said in the past that the -- the policy is different than that.
Ruthanne M. Deutsch: So, I mean, the main thing wrong with that is that their -- the assertions that are strewn throughout the reconsideration order that the deregulatory moves will not harm minority and female 1 ownership --
Justice Breyer: But that isn't what they -- they said there's no evidence, they have a couple of sentences there, which you've read.
Ruthanne M. Deutsch: Yes, but they also say --
Justice Breyer: Now why in heaven's name did you not, or groups that support you, given the tremendous number of people who I'm happy are interested in this -- why aren't there some studies or something? There are 10,000 law professors and economics professors who look for studies to do. Why isn't there something?
Ruthanne M. Deutsch: Well, there is something on this issue which they ignored, even as they cited one --
Justice Breyer: Okay, what?
Ruthanne M. Deutsch: The Free Press study.
Justice Breyer: Free Press.
Ruthanne M. Deutsch: Why did they ignore it or?
Justice Breyer: Okay, that's -- the free. Is there anything other than that?
Ruthanne M. Deutsch: Yes.
Justice Breyer: What?
Ruthanne M. Deutsch: They have their own study that's titled "Whose Spectrum Is It Anyway" that was cited in comments in -- in the 2014 further notice of proposed --
Justice Breyer: Okay. Okay, I'll look at those.
Ruthanne M. Deutsch: Yeah. And -- and I would just say that there -- there's a lot of wiggle room in the reconsideration order especially, but I would point you to the statement that the rule -- the repeal of the NDCO rule will have no material effect on minority and female ownership, the repeal -- that's at 87A. The TV rule repeal is not likely to harm minority and female ownership, will have no negative impact. That's 128A. And, again, these statements about them, they are -- they are framed as findings and determinations. And when you look at what they're actually based on, it's that listing of numbers on page 37 of our brief that has nothing on women, and as for the minority data, the American Statistical Association is here telling you that it is worse than doing no analysis at 1 all to drew -- draw the conclusions that they drew.
Justice Breyer: Thank you.
Chief Justice Roberts: Justice Alito.
Justice Alito: In your briefing, you argue that the Petitioners forfeited any constitutional argument that the FCC could not consider minority or female ownership. Would you, therefore, agree that there is no need for the Court to consider that constitutional question?
Ruthanne M. Deutsch: Absolutely. And I would also point to this Court's decision in the first Fox case, where it recognized that until the administrative law analysis of whether the underlying decision to be made is a reasoned one and you've addressed any arbitrary and capricious concerns, then it's premature to reach the constitutional question.
Justice Alito: All right. Thank you.
Chief Justice Roberts: Justice Sotomayor.
Justice Sotomayor: Counsel, you're relying on the Free Press data. Could you give me your best authority for the idea that the FCC 1 was required to utilize the Free Press data?
Ruthanne M. Deutsch: I would point you to the administrative --
Justice Sotomayor: And is there any -- and -- and -- and let me just follow up. And is there any requirement for it to have needed to explain why it didn't rely on it?
Ruthanne M. Deutsch: I -- I don't have a case at hand, Justice Sotomayor, other than the -- the bedrock cases, like State Farm, but, you know, having cited one of the Free Press data points in its listing of numbers and then having ignored the results from that study that at least attempted to do a more reasoned analysis of the exact same question that the FCC purported to analyze in that listing is -- it's a little bit like throwing stones from glass houses for the agency now to be here saying that the Free Press study had its own problems. And so, you know, I think it -- it's just bedrock bad law that they need to, at the very least, explain why their analysis was better than the Free Press study, which they patently could not do.
Justice Sotomayor: Finally, I don't 1 think you're disputing that the agency gets to decide how important it thinks minority and female ownership is in the context of any given rule-making. And I don't think the agency has changed its position that its ownership rules are not primarily intended to promote minority and female ownership. So how do we reconcile that with your position?
Ruthanne M. Deutsch: I -- I think it's -- again, it's just -- this is standard arbitrary and capricious review, which we told the Court at the petition stage. The agency gets to set the goals, consistent with the statute. And a reviewing court can only look and -- and -- and see whether they did what they said they were going to do and offered a reasoning explanation. The -- the government here admits that if harm had been found, they would have had to weigh that harm. It would have -- you know, to the extent to see whether it cautioned against the consolidation it wanted to go forward with. And, you know, we disagree that -- that they -- you know, that there was no harm to be found on this record. They didn't, 1 especially for women, where --
Justice Sotomayor: Thank you, counsel. I think you've gone over my time.
Ruthanne M. Deutsch: Thank you.
Chief Justice Roberts: Justice Kagan.
Justice Kagan: Ms. Deutsch, you began your argument today by saying that the government agrees with you that minority and female ownership should be taken into account in decision-making like this. But as I understand what the government has done this morning is to say that we -- that they don't agree with you. I mean, this is unlike in their briefs, but, at argument, the government has said, well, with respect to 202(h) determinations, we've never taken into account female and minority ownership. And Justice Thomas asked you a similar question, but I just wanted to make sure that you had the opportunity to respond to that assertion of the government, that it had historically not taken female and minority ownership into account in the 202(h) context specifically.
Ruthanne M. Deutsch: I didn't -- it's a 1 better question for Mr. Stewart. I -- I agree that it hasn't been the only factor or a primary factor, but to the extent that Mr. Stewart was saying that it had never been considered as a factor, I think that's just not consistent with history. And then --
Justice Kagan: Well, I guess I'm -- I'm really giving you an opportunity to tell me what to look to to decide whether you or Mr. Stewart is right on that question.
Ruthanne M. Deutsch: Thank you. So, again, I would look to the earlier orders cited at page 6 and -- and 10 on our brief that are -- predate 202(h), and then the first 202 review, 2002 review, under 202(h) defines the policy goals and said, "We will first define our goals so we can then assess whether our current broadcast ownership rules are necessary to achieve these goals." Then talks about the five types of diversity, which include minority and female ownership as one goal, and says -- and this is at 18 FCCR at 13634 -- "encouraging minority and female ownership historically has been an important Commission objective, and we affirm 1 that goal here." And then, again, JA 335 talks about how the Commission's broadcast ownership rules help further this purpose of promoting minority and female ownership.
Justice Kagan: So, Ms. Deutsch, suppose that that's right, and the -- the Commission has historically considered this as -- as one factor in its broader public interest analysis, but, here, the Commission says something along the lines of: Look, there's actually not a lot of data about how this rule will affect minority and female ownership. To the extent that we have data, we think it's -- it -- it shows that it won't have an impact, and -- and so we're going to go with this new rule. Why -- why isn't that enough?
Ruthanne M. Deutsch: Because it would be an important break with past commitments, not only the repeated promise to -- to collect data and analyze this problem, which, as I said, goes back to the 1995 TV rule, but --
Justice Kagan: Well, are you saying that the Commission has a free-standing obligation to go out and collect data itself 1 with respect to this? The Commission can't rely on the notice-and-comment process to -- to provide it with data?
Ruthanne M. Deutsch: The Commission has its own data already that it collects in the Form 323, for instance. So, no, I'm not saying that, but I think what was wrong with your first formulation or how it might have been, you know, more passable was if the Commission had said: We can't figure it out. It's too uncertain. Put to one side our promises about figuring it out better. But we're willing to move forward no matter the harm to this goal, even though we still think this goal is important, but we -- we just -- you know, we're throwing up our hands.
Justice Kagan: Thank you.
Ruthanne M. Deutsch: We can't do it.
Justice Kagan: Thank you.
Chief Justice Roberts: Justice Gorsuch.
Justice Gorsuch: I'd like to pick up there. As I understand it, it would be okay for the Commission to say we're -- we're going to try this no matter the harm to other goals. Why isn't what they did better than that? 1 And what are we supposed to do about it? The 1970s -- we have 1970s rules governing cross-ownership still today, and the one thing we know about the '96 Act is it -- it -- it had a deregulatory impulse. And yet that impulse has never been exercised. The idea, I think, was to have experiments every four years and see how it goes. And the agency sought all the data it can get, and as Judge Sirica pointed out, maybe -- you know, one can -- one can parse it and complain and flyspeck it, but isn't the best source of data an experiment? And isn't the agency in something of a Catch-22 position, Judge Sirica wonders. What do you -- what do you say to those thoughts?
Ruthanne M. Deutsch: I have a bunch of responses. First, it's hardly flyspecking evidence to assert that there will not be no harm, for example, to female ownership when you have zero --
Justice Gorsuch: Well, the --
Ruthanne M. Deutsch: -- information on --
Justice Gorsuch: -- but -- but, as 1 you know on that, they say there just isn't -- there isn't good data available. And -- and in response to a prior Third Circuit order, they -- they publicly solicited all the data anybody in the country could provide.
Ruthanne M. Deutsch: Well, there were analyses --
Justice Gorsuch: What do we do about that?
Ruthanne M. Deutsch: -- of that, but -- but going to the larger point of the -- the Commission's being stuck, you know, the FCC has much to do with the delays here. I mean, Prometheus III, for example, was the Third Circuit simply telling the agency to hurry up. And we're here in 2020 looking at an order cycle that began in 2010. And that --
Justice Gorsuch: I -- I -- that doesn't address my fundamental question, though. We're stuck with rules from the 1970s that, 20 years ago, 25 years ago, Congress said were outdated. And --
Ruthanne M. Deutsch: Well --
Justice Gorsuch: -- when -- when is the FCC going to be able to try an experiment? 1 And if it says in its best considered judgment after multiple rounds of remands and multiple rounds of data collection and public comment that it earnestly believes that these rules aren't going to negatively impact anyone and might actually affirmatively benefit most people, when exactly is it allowed to see and -- and experiment with that for four years and then collect the data and see what actually happened?
Ruthanne M. Deutsch: Well, a few things. First, the -- the agency tomorrow could issue a separate rule-making on the -- the NBCO rule, for example, apart from the 202(h) process, and nothing impedes that. Second, there's no experiment-now-and- see-what-happens, I think, reasonable reading of 202(h) which requires the agency to assess, as competition has changed, whether the rules are necessary in the public interest at that moment. It isn't a license to move forward no matter the harm to one of your own public interest goals and then, you know, sort it out later, particularly because, as we argue in our brief, the sorts of harms here from unwarranted consolidation cannot easily be undone.
Justice Gorsuch: Let me ask you a -- a question about the retention of jurisdiction here. I understand that courts obviously have the practice of sometimes deferring to -- to another court and -- and -- and consolidating matters voluntarily, but what authority is there for the Third Circuit to have retained jurisdiction over not one rule-making but now three over the course of 15 years? That does seem a little unusual in its duration and in the number of rule-makings involved. I think Judge Williams called it contrary to the goals of Congress.
Ruthanne M. Deutsch: Well, Justice Gorsuch, our -- our view is that it's a proper exercise of that court's jurisdiction, and the government never challenged it below. It -- it happens sometimes, although not frequently, for -- for similar cases that have long and complicated histories and also a history of agency delay. And, you know, of course, the Court could modify that ruling to the extent that it sees fit. You know, we -- but it doesn't 1 undermine the -- the core problem here, which is the arbitrariness of the reconsideration order. And on that basis, certainly, the Third Circuit should be affirmed.
Chief Justice Roberts: Justice Kavanaugh.
Justice Kavanaugh: Thank you, Chief Justice. And good morning, Ms. Deutsch. You've referred, I think quite rightly, to administrative law basics a few times in your answers, and I want to get your reaction to one way to look at this. Courts, obviously, review agency legal interpretations to make sure the agency is not departing from the law enacted by Congress, and on that front, reviewing the law, our review is -- is usually pretty tight, pretty stringent, putting aside whether there's an ambiguity in the law. On the other hand and critically, federal courts do not make the policy calls. We defer to agency policy judgments within the constraints imposed by Congress. And, here, it's the broadest possible 1 language that Congress uses, public interest, not much of a constraint at all, a broad and Ms. Walker alluded to arguably too broad a delegation. But that doesn't give us much to work with. And then arbitrary and capricious review -- and Judge Sirica said this many times -- is highly deferential to the agency's policy judgments. And -- and there's a lot of case law, as you know, in the FCC context, Justice White's opinion for the Court in the WNCN case, that predictive judgments made by the agency get especially significant judicial deference. And so, in the -- at the end here, it's deferential in the policy, the public interest standard, they made a predictive judgment. How can we sitting here second-guess all that?
Ruthanne M. Deutsch: Well, a few things, Your Honor. I -- I agree completely that the agency's reasoned predictive judgments are afforded deference, and that's, you know, APA 101. But, here, there -- there's no reasoned judgment to defer to. There is nothing there on 1 women, no data and no explanation even or attempt to explain why the no-harm finding that's arbitrary on its own terms as they drew for minority ownership would also transfer automatically to women. In cases like WNCN, NCCB, Fox, in every one of those cases, there is at the very least a reasoned decision tree set out by the agency of why they're doing what they're doing and how they're weighing the pros and cons. The government --
Justice Kavanaugh: Well, isn't -- go ahead.
Ruthanne M. Deutsch: -- agrees to weigh, but -- and they say, well, we don't have to weigh because we don't have any evidence of harm. But ignoring evidence of harm doesn't make it go away.
Justice Kavanaugh: And what -- what do you say -- and you -- you might have indicated this to Justice Breyer -- but what do you say is the absolute best evidence in the record for you that scaling back these rules will negatively affect women and minority ownership?
Ruthanne M. Deutsch: Well, certainly, the Free Press study which is cited in our brief and cited by the government in its analysis. And I would also point you to one of the early reviews where the Commission itself represent -- recognized the drop in minority and female ownership after the consolidation in the late '90s, and that's cited in our brief at 10 at 15 FCCR at 11084. And also, the Free Press study, in addition to doing the historical trend analysis for minority, also did a cross-sectional analysis for both people of color and women-owned stations and showed that the more consolidated the market, the less likely there was to be representation by these groups --
Justice Kavanaugh: And last --
Ruthanne M. Deutsch: -- in --
Justice Kavanaugh: -- last question. To what extent, if any, should we take into account that during the pendency of this litigation the local news industry has been decimated?
Ruthanne M. Deutsch: Well, it's, I think -- I'm not sure that's in the record, but, you 1 know, I think, to the extent you want to take account of what's happening after this record has closed, there's a -- a much easier path forward, which is to affirm the Third Circuit and let the already delayed 2018 review move forward, including analyzing the results of the incentive option, which is another area where the data indicated that women and people of color were disproportionately --
Chief Justice Roberts: Justice --
Ruthanne M. Deutsch: -- entering the market.
Chief Justice Roberts: -- Justice Barrett.
Justice Barrett: Ms. Deutsch, I have a question about the Free Press study. So whether -- and maybe I -- I'm -- maybe I'm not fully understanding its scope, but I thought the Free Press study was largely backward-looking. So, for example, on page 39 of your brief, you talk about how its tracing concluded that the 1990s television rule changes contributed to the loss of 40 percent of the previously minority-owned stations. Was it entirely backward-looking, looking at the effects of rule changes in the 1 past, or did it have a predictive component?
Ruthanne M. Deutsch: The trend analysis was backward-looking, just like the government's analysis of -- of the numbers was. It just did it better by using better numbers that were corrected for the problems in tracing. But, as I said, they also did a cross-sectional analysis, so taking a snapshot in time, showing that the more consolidated the market, the less likely there were to be women and people of color owners.
Justice Barrett: And -- and so, to be sure that I understand that, you're saying that they did make a predictive judgment? It offered predictive analysis like, if you make this change, then this is the likelihood that this will happen, this being the decrease in minority and women-based ownership?
Ruthanne M. Deutsch: I -- I don't think it went so far as that, but it was an inference that could be drawn from that analysis.
Justice Barrett: Well, if it's just an inference that could be drawn from that analysis, why isn't the Commission correct that there was no evidence in the record that showed 1 there would be harm?
Ruthanne M. Deutsch: Because its -- its own numbers, even, you know, without any correction, showed that there was harm from past consolidation, and there's no reason to -- to think that that wouldn't happen from future. Plus, as I said, there's this other study called "Whose Spectrum Is It Anyway?" It's cited in the -- the Notice of Proposed Rule-making in 2014 and in some of the comments that interviewed about 100 market participants that chronicled the difficulties faced by more diverse owners under consolidation --
Justice Barrett: So -- and is that used --
Ruthanne M. Deutsch: -- and how price would be --
Justice Barrett: -- in the sense you were talking -- you talked in your briefs about the need for statistical evidence and the fact that the government had no evidence at all in the record about the effect on women ownership, as opposed to the minority evidence, which you say that it ignored. But if there's no statistical 1 evidence, and I hear you saying you're talking about the backward-looking Free Press study, you're talking about interviews, is there anything in the record that's actually a statistical analysis that shows the likely impact of these changes on the relevant minority and women community?
Ruthanne M. Deutsch: Other than the sources I've mentioned, no.
Justice Barrett: Thank you, counsel. I don't have any other questions.
Chief Justice Roberts: A minute to wrap up, Ms. Deutsch.
Ruthanne M. Deutsch: Thank you, Your Honor. I have three points. I'll try to go fast. Minority and female ownership, I just want to reiterate, has long been baked into the public interest standard in this context. I've read you some of the quotes. Industry petitioners are up against the government, former commissioners, and history in contending otherwise. Second, the government agrees that a reasonable weighing of all public interest goals that they have defined in this context is 1 necessary, and that simply didn't happen here. On this record, there's no reasoned predictive judgment to defer to on gender or on minority ownership trends. And the agency didn't make, much less attempt to explain, its decision to deregulate no matter the harm to its own public interest goal. And just the opposite, there are unfounded statements that permeate the reconsideration order about how the rule repeals will have no material effect or will not likely harm minority and female ownership. And although they talk a lot about the newspaper/broadcast cross-ownership rule, for the local TV changes, for example, that is the only evidence that they rely on for no harm, is this listing of numbers on page 37 of our brief. Finally, I would note that the remedial concerns don't undercut the Third Circuit's core conclusion here that the Commission undertook dramatic regulatory repeal without reasonably considering an aspect of the public interest I think it continues to espouse, the -- the -- the colloquy with Mr. Stewart notwithstanding. 1 The Court can tweak the remedy as it sees fit, but the best course is to allow the Commission to consider these questions afresh in its 2018 review, where it can analyze the better data, including the full results of the incentive auction, to reach a reasoned decision on whether deregulation is actually in the public interest. For these reasons and others in our brief, the Third Circuit should be affirmed.
Chief Justice Roberts: Thank you, counsel. Rebuttal, Mr. Stewart? REBUTTAL ARGUMENT OF MALCOLM L. STEWART ON BEHALF OF THE PETITIONERS IN 19-
Malcolm L. Stewart: Thank you, Mr. Chief Justice. Let me first clarify our position with respect to the potential impact of minority and female ownership data on the cross-ownership rules. My primary point is that when those rules were first adopted, they were adopted for reasons other than their potential effects on minority and female ownership, and so the Commission, in deciding whether to retain those 1 rules, has naturally focused on whether the original justification continued to apply. Now, in the era of post-1996, the enactment of the two -- Section 202(h), you can find documents that list basically the full range of public interest considerations as potentially relevant to the 202(h) reviews, but I'm not aware of any instance, even under Section 202(h), in which the FCC has actually amended, repealed, or retained a cross-ownership rule for the stated reason of its impact on minority and female ownership. It just historically, either before or after 1996, has not been a factor that has animated the Commission's decision with respect to the ownership rule. Second, I think the most straightforward path to decide the case is to follow the one that the Commission itself laid out in the reconsideration order. It said the historical reasons for the cross-ownership rules no longer apply; allowing cross-ownership will likely benefit consumers. It acknowledged that incomplete data left uncertainty as to the likely effects of repeal and amendment on women 1 and minorities. But the agency's best estimate was that there would be no harm. And the bare possibility of harm was not a -- was not a sufficient ground for foregoing changes that the agency otherwise considered highly beneficial. The -- the Court has said numerous times that it will "uphold a decision of less than ideal clarity" if the agency's path may reasonably discern -- be discerned. And I believe the agency's path can reasonably be discerned here. And, third, I'd like to focus again on the quadrennial review scheme that Section 202 lays out. People have referred to the deregulatory thrust of the 1996 Act, and that's correct, but the principal purpose of Section 202(h) was to ensure that cross-ownership rules didn't remain on the books through inertia, that if they remained in place, it was because the Commission had reexamined them and had made a fresh determination that they continued to serve the public interest. And the Third Circuit's approach really thwarts that. If the cross-ownership amendments had been allowed to go in effect -- 1 into effect in an earlier year, we would now have more data on the potential effects of those rule changes on minority and women. The -- the effect of the court of appeals' decision is that the periodic review process can be derailed by commenters who identify possible countervailing effects and insist that the agency perform new research before it can amend the rules that are already in place. That has been the very effect that Congress attempted to forestall in requiring quadrennial reviews. Thank you, Mr. Chief Justice.
Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 11:21 a.m., the case was submitted.)