FCC Says It Gave Adequate Notice of Program Carriage Standstill Rules

The FCC said the Administrative Procedure Act doesn’t require notice be given on specific rules when they relate to agency procedures. “The standstill procedures and the revised procedural rules adopted herein, including extending the deadline for a defendant to file an answer to a complaint, are rules of agency procedure for which no notice is required under the APA,” the commission said in an order (http://xrl.us/bk3ueg). “The APA’s notice requirements are satisfied where the final rule is a ‘logical outgrowth’ of the actions proposed.” In any case, the rulemaking notice four years ago did seek comment on clarifying prima facie rules of what indies must show in making program carriage complaints, the commission said.

The new rules will give such channels interim carriage after the Media Bureau, which wrote the order, finds the complainants made a prima facie case. “The standstill procedure will help to prevent retaliation while a program carriage complaint is pending, and thus is a ‘logical outgrowth’ of this proposal,” the new order said.

The commission also rejected cable-operator comments that program carriage rules infringe on the companies’ Fifth Amendment rights, the order said, citing a claim by Time Warner Cable. “The program carriage rules merely prohibit a cable operator from requiring a financial interest in a video programming vendor as a condition for carriage, from coercing a video programming vendor to provide exclusivity as a condition of carriage, or from discriminating on the basis of affiliation that unreasonably restrains the ability of unaffiliated video programming vendors to compete fairly,” the order said, citing the 1992 Cable Act. The rules also don’t “compel a cable operator to carry certain programming” or specify what must be paid, the regulator said. “The rules substantially advance the legitimate governmental interest in promoting competition and diversity in the video programming market, an interest that Congress has directed the Commission to vindicate and that the courts have recognized as important."

The order comes after the record shows current procedures “are ineffective and in need of reform” in handling program carriage complaints, the FCC said. It doubled the amount of time defendants have, to 60 days, to respond to such complaints. For the complaints, evidence “may be based on an explicit or implicit threat” to the indie, the agency said. “For example, a complainant alleging that an MVPD has coerced a programming vendor to grant exclusive carriage rights or required a financial interest in a program service must provide documentary evidence, such as an email from the defendant MVPD, documenting the prohibited action, or an affidavit from a representative of the programming vendor involved in the relevant carriage negotiations detailing the facts supporting the alleged violation of the program carriage rules.” Direct evidence an indie was discriminated against on the basis of its affiliation can establish an initial case, but isn’t needed, the commission said. “Such documentary evidence is highly unlikely to be available to a programming vendor in advance of discovery, and may not exist at all.”

The document listed how an indie must show a multichannel video programming distributor didn’t carry it or gave less favorable carriage because the channel wasn’t affiliated with the MVPD. The complainant must show it’s similar to the MVPD-affiliated channel it alleges was given more favorable treatment, the agency said. “Although no single factor is necessarily dispositive, the more factors that are found to be similar, the more likely the programming in question will be considered similarly situated to the affiliated programming.” The variables include such as genre, ratings and license fees, and the audience, advertisers and programming the indie targets. Comments on a related further rulemaking notice are due 60 days after its published in the Federal Register, replies 30 days later.

McDowell said he dissented on APA grounds, as had been expected. “An analysis of a possiblestandstill framework would benefit significantly from further debate,” he wrote. “Here, as evidence of notice, the majority points to one sentence in a 2007 notice requesting comment on whether to adopt rules ’to protect programmers from potential retaliation if they file a complaint.’ The majority asserts that the standstill rules are a ‘logical outgrowth’ of this proposal. I disagree.”

Commissioner Michael Copps said more administrative law judges may be needed to deal with future complaints, predicting an “increased caseload” at the commission. “We must also address a possible shortfall in the number of ALJs to hear and resolve these disputes,” he wrote. Commissioner Mignon Clyburn, noting critiques of the agency’s process for handling program carriage complaints, said she looks forward to getting feedback on the rulemaking notice. “Greater certainty and broad clarification has been needed for some time, and I am glad that we are on our way to providing it,” she wrote.

The rules are “an unfortunate trifecta,” NCTA President Michael Powell said: “A flawed process that the FCC stubbornly refused to correct, substantive policy discussions that show little regard for the limits of agency authority or constitutional rights, and a disturbing lack of appreciation of the potential impact of government intervention on consumers or the marketplace.” The association “regrettably” must “now explore other avenues for redress,” he wrote. The new rules aren’t “justified by any record and will result in additional regulatory burdens,” a Comcast spokeswoman said. “Comcast will review the order and the legal, policy and practical questions resulting from this action,” she continued, and would not say whether the company may sue to block the rules in court.