In May of this year, the National Association of Broadcasters (NAB) petitioned the D.C. Circuit to review a Public Notice issued by the Media Bureau. The Public Notice, entitled “Processing of Broadcast Television Applications Proposing Sharing Arrangements and Contingent Interests,” explained a shift in how the Bureau will review certain broadcast license assignments and transfer applications. According to the Notice, transactions where two or more broadcasters in the same market plan to enter sharing agreements or create contingent financial interests will be reviewed with “careful” Commission scrutiny, a seemingly higher standard than the Bureau previously used for these types of transactions.

NAB argued that the Bureau does not have the authority to change the level of scrutiny for broadcast transactions that were otherwise “presumptively valid” under the Commission’s existing media ownership rules. The Association viewed the Public Notice as a “de facto” rule, effectively imposing new regulations without following the proper notice and comment requirements. NAB believed that the Media Bureau exceeded its delegated authority in issuing the Public Notice and that the Notice was “arbitrary, capricious, and an abuse of discretion,” violating the Administrative Procedure Act.

On September 9, the D.C. Circuit granted the FCC’s motion to dismiss, finding that the Court did not have the authority to review the Media Bureau’s Public Notice. The Court agreed with the FCC, stating that the Court only has the jurisdiction to review a “final agency order” and that the Public Notice in question was not a final agency order. Moreover, the Court pointed to a “clear statutory requirement” that the FCC must review a decision by its staff before that decision (or the underlying action) is reviewable by the Court.

Prior to filing its petition, NAB wrote two letters to the FCC’s Secretary, outlining why the Association disagreed with the FCC’s Public Notice. One of the letters ended with a “respectful request” that the “Commission direct the Bureau to withdraw the Public Notice and immediately cease and desist application of the strict scrutiny standard to sharing arrangements that involve contingent interests.” Despite this request, the Court found that the Association’s letter was not the “functional equivalent” of an application for review. To properly obtain judicial review, NAB should have filed a formal application for review with the FCC and waited for the Commission to rule on the application. The outcome of that ruling would then constitute a “final order,” reviewable by the Court.

In its original petition for review, NAB stated that it would be futile to petition the FCC regarding a Public Notice because by virtue of being published, the Notice was implicitly approved by the Commission. The D.C. Circuit did not buy this argument and required more concrete evidence to support NAB’s claim of “futility.”

The Court’s decision sends a strong signal to all parties before regulatory agencies, especially those in front of the FCC. Now, it is clear that if a party disagrees with an agency’s position in a Public Notice, it must file a formal petition for review by the Commission. Only then, will the Court find it has the jurisdiction to review the agency’s action and possibly the underlying Notice. Applications for review must be filed within 30 days of a Public Notice and according to the FCC, the party’s application should explicitly state that the petitioner is submitting an application for review pursuant to 47 C.F.R. § 1.115.