On April 1, 2021, in Federal Communications Commission v. Prometheus Radio Project,1 the Supreme Court unanimously held that a decision by the Federal Communications Commission (FCC) to repeal or modify three ownership rules (which limited the number of radio stations, television stations, and newspapers that a single entity may own in a given market) was not arbitrary and capricious for purposes of the Administrative Procedure Act (APA). The Court specifically rejected the argument, put forward by Prometheus Radio Project (Prometheus), that the FCC’s assessment of the likely impact of the rule changes on minority and female ownership rested on flawed and inadequate data. The Court emphasized that the FCC had repeatedly requested additional data on this topic and, having received none, appropriately analyzed the available data. Among other things, the case demonstrates the importance of providing to agencies any data they request during administrative proceedings; the lesson of the Court’s decision is that if commenters do not provide the data an agency requests, an agency is ordinarily under no general obligation to perform empirical analysis itself and that absent data in the administrative record, an agency has more leeway to rely on predictive judgments. The case thus underscores the importance of engaging with an agency during a rulemaking process with an eye toward potential APA litigation.
This case concerns three ownership rules adopted by the FCC between 1964 and 1975. The rules, which are subject to review every four years, were designed to ensure that no single entity owned too many media sources in a given market. For instance, the Local Television Ownership Rule (one of the three rules) restricted the number of local television stations that an entity may own in a market.
The FCC conducted its quadrennial review most recently in 2016 and concluded that all three rules remained necessary to serve the agency’s public interest goals of promoting “competition and a diversity of viewpoints in local markets.” On reconsideration, however, the agency reversed course. Finding that rapidly evolving technology and the rise of new media outlets had transformed how Americans obtain news and entertainment, the FCC concluded that the rules were obsolete. The FCC also found that repealing the rules was unlikely to harm minority and female ownership.
Prometheus and several other public interest and consumer advocacy groups petitioned for review, arguing that the FCC’s decision to repeal the three rules was arbitrary and capricious under the APA. The Third Circuit vacated the FCC’s order, holding that the record failed to support the FCC’s conclusion that the rule changes would not adversely affect minority and female ownership. The agency sought review before the Supreme Court, which granted certiorari and ultimately reversed the Third Circuit’s ruling.
The Supreme Court concluded that the FCC’s order passed muster under the deferential arbitrary-and-capricious standard of review. The Court specifically rejected Prometheus’s argument that the FCC had relied on flawed and inadequate data in reaching its conclusion that the rule changes would not harm minority and female ownership. The Court first decided that the FCC’s interpretation of the available data was acceptable. As for the alleged inadequacy of the data, the Court emphasized that the FCC had “repeatedly ask[ed] for data on the issue,” but had received none. The Court concluded that the FCC did not err in “rel[ying] on the data it had (and the absence of any countervailing evidence).”
The Supreme Court’s decision makes clear that the onus for creating a detailed administrative record, including providing relevant data, ordinarily falls on individuals seeking to influence agency action, and not the agency. As the Court explained, it “is not unusual in day-to-day agency decision making within the Executive Branch” for agencies to lack “perfect empirical or statistical data.” That dearth of evidence, the Court said, does not create an “obligation on agencies to conduct or commission their own empirical or statistical studies.” To the contrary, the Court found the FCC’s “predictive judgment” reasonable “[i]n light of the sparse record on minority and female ownership.” That was all the more true because the agency had repeatedly sought—but never been furnished—evidence on the topic: The Court explained that the FCC could rely on the “absence of any countervailing evidence.”
In those ways, the Court’s decision underscores the importance of engaging carefully with an agency during a rulemaking process, including by building an administrative record with an eye toward potential eventual APA litigation challenging or defending the agency action.
WilmerHale’s administrative-law and appellate experts will continue to monitor developments in this area of law.