FCC v. Prometheus Radio Project

Under Section 202(h) of the Telecommunications Act of 1996, the Federal Communications Commission (FCC) must review its ownership rules every four years to repeal or modify any rules that no longer serve the public interest. In conducting its analysis under Section 202(h), the FCC must consider the effects of the rules on competition, localism, viewpoint diversity, and minority and female ownership of broadcast media outlets.

The FCC maintains several ownership rules that "limits the number of radio stations, television stations, and newspapers that a single entity may own in a given market." In concluding that three of its ownership rules no longer served the public interest, the FCC reasoned that the record evidence did not suggest that repealing or modifying those rules was likely to harm minority and female ownership. Petitioner challenged the FCC order, arguing that the FCC’s decision to repeal or modify the three ownership rules was “arbitrary and capricious” under the Administrative Procedure Act (APA). Specifically, Petitioner argued that the record evidence did not support the FCC’s predictive judgment regarding minority and female ownership. On appeal, the Third Circuit vacated the FCC’s order and held that the record did not support the FCC’s conclusion that the rule changes would have minimal effect on minority and female ownership. The Supreme Court reversed and held that the FCC’s decision to repeal or modify the three ownership rules was “reasonable and reasonably explained for purposes of the APA’s deferential arbitrary and capricious standard.” According to the Court, the FCC did not “ignore” the studies submitted to the agency as Petitioner asserts. Rather, the FCC “simply interpreted them differently.” Moreover, after examining the FCC’s reasoning and analysis, the Court concluded that “[t]he APA requires no more.” REVERSED.