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Monday, December 29, 2008

Cable's Adventures in FCC Land
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Little Alice quickly discovers the meaning of "arbitrary and capricious" when she ventured into the Queen's Croquet Grounds in Lewis Carroll's "Alice's Adventures in Wonderland." "Off with their heads!" is the standard refrain of the Queen of Hearts when confronted with anyone incapable of playing the game according to her rules, which Alice quickly realizes means no rules at all. Late on Christmas Eve, the FCC's Media Bureau issued a similar edict to Chief Administrative Law Judge Richard Sippel, who was tasked with presiding over six program carriage cases brought by WealthTV, Mid-Atlantic Sports Networks and NFL Enterprises against various cable operators, summarily dismissing him from the cases. "Off with his head!" cried the Media Bureau Chief.

Some history is required to understand the full import of what is happening down this particular rabbit-hole. In October, the Media Bureau had referred the four program carriage complaint cases, and a similar, but not identical complaint filed by NFL Enterprises against Comcast, for resolution of disputed issues of material fact by hearing before an Administrative Law Judge; the cases were initially assigned to ALJ Arthur Steinberg. The Media Bureau referred the cases to the ALJ in a 57 page Hearing Designation Order, which all but found the cable operators guilty of discrimination against the unaffiliated programming networks based solely on allegations in the paper record before the Bureau. Unfortunately, as comprehensive as the HDO was concerning the Bureau's tentative findings and conclusions, the HDO failed in its main obligation, which is to "designate" the issues to be resolved by the ALJ at hearing. Thus, five days later an "erratum" was released purporting to state the issues designated for resolution.

The HDO had given the ALJ 60 days to conclude the factual investigation and submit a recommended decision resolving whether there had been a violation of the program carriage rules. On November 30, following a pre-hearing conference and consideration of petitions filed by both sides for modification and clarification of the HDO, Presiding Judge Steinberg determined that the 60-day timeframe set forth in the Media Bureau HDO could not be achieved. ALJ Steinberg found the proceeding involving six separate program carriage complaints, three complainants, and four cable operators to be "extremely complex," involving the credibility of witnesses and requiring some factual discovery to resolve.

Under all of these circumstances, it is the Presiding Judge's view that it would be impossible to develop a full and comprehensive record and afford the parties their due process rights within the 60-day timeframe contemplated in the HDO. Thus, the public interest would be better served, and the scarce resources of the Commission would be better utilized, by allowing an adequate period of time, ab initio, to litigate these cases fully and properly.

This opinion that due process would not be served by keeping to the 60-day timeframe was based on the ALJ's "more than 32 years of experience as both a Trial Attorney and an Administrative Law Judge." Not only did ALJ Steinberg alter the timeframe, but he also ruled that the cable network complainants would have the burden of proof in demonstrating that the cable companies had discriminated because they did not own a financial interest in the networks, and that he would set aside the Media Bureau's preliminary factual findings and conclusions that the cable operators had engaged in discrimination in violation of the program carriage rules and conduct the trial "de novo"--that is, from the start--and would issue a recommended decision. "Off with his head!" was the response. Within days of release of his order, it became known that ALJ Steinberg soon would be retiring from the FCC, and that Chief Judge Sippel would be taking over the cases. Although it was later claimed that the retirement was long planned, the case was becoming, as Alice would say: "Curiouser and Curiouser."

On December 15, 2008, Chief Judge Sippel established a revised schedule governing factual discovery, document requests, the filing of expert reports and witness depositions that began on December 5, 2008 and would end upon commencement of the hearing on the matter scheduled for March 17, 2009. The docket for the proceeding indicates that between December 5th and 24th, the parties were actively engaged in discovery and preparation for trial. In late November, complainants WealthTV and MASN filed motions, respectively, to revoke and reconsider the ruling of the Chief Judge.

Late on Christmas Eve, the by now too familiar edict was issued: "Off with his head!" The Media Bureau issued a Memorandum Opinion and Order effectively dismissing the ALJ from considering the cases and returning them to the Media Bureau for disposition of the carriage discrimination claims. The Media Bureau Chief claimed that in failing to meet the original December 9th deadline, the ALJ had essentially defaulted on his obligation to produce a recommended decision. The technical reason given was that the ALJ had "exceeded his authority" by setting a hearing date beyond the 60-day deadline for issuing a recommended decision, and that the HDO had essentially "expired" by its terms on that date, thus terminating the ALJ's delegated authority over the matters. Of course, the 60-day deadline was not a condition of the delegation of authority to the ALJ to resolve the cases, but why let rules or fairness get in the way of a good beheading? The Queen of Hearts wouldn't.

There are several problems with these latest actions of the FCC's Media Bureau. They reflect disdain for the rule of law, and in particular for the integrity of the adjudicative process specifically and for due process generally (see here and here).  More disturbingly, they offer confirmation of concerns about manipulation of data and decisional processes as expressed by some Congressional leaders, and disregard explicit guidance for the conduct of Commission business provided by others.

Moreover, under FCC rules, as ALJ Steinberg recognized in his order, once a matter has been referred to an Administrative Law Judge, the ALJ possesses plenary authority to manage the proceedings as he or she sees fit. Having issued the HDO, the Media Bureau's authority over the matters contained therein is at an end. Thereafter, the FCC's Enforcement Bureau is authorized to participate in the ALJ proceedings on behalf of the Commission (and it has done so, claiming to be representing the Media Bureau in so doing), but until the issuance of a recommended decision by the ALJ -- or guidance from a "higher" authority, that is, the full Commission, no Bureau of the FCC is empowered to decide anything. This understanding of the referral of the matter was apparently shared by all the parties. Complainant WealthTV had filed a motion to "revoke" the HDO, and complainant MASN filed an untimely petition for "reconsideration" of the HDO.  No party alleged that the HDO had expired by its own terms, nor did any party have the opportunity to be heard on that issue. Oddly, even though the Media Bureau's expiration theory applies equally to all six cases referred by the HDO, the Revocation Order applies only to the five that were subject to the petitions for revocation or reconsideration. But as on the Queen's Croquet Grounds, in a forum without apparent rules, no order or predictability is to be expected.

The program carriage actions are also disturbing in their lack of regard for the priorities Congress has tried several times in the last few months to set for the FCC as the nation heads into a DTV Transition which is now less than 60 days away. In September 2008, Senators Inouye, Hutchison, and Stevens admonished Chairman Martin that the broadcast DTV transition was drawing near, urged him to focus the Media Bureau's energies on preparations for that transition, and urged him to avoid pursuing contentious policy initiatives.  In December 2008, the soon-to-be-Chairmen of the House and Senate Commerce Committees wrote Chairman Martin to insist that he focus on the DTV transition.  Despite these strong messages from top congressional leaders, Chairman Martin has continued to pursue contentious policy initiatives (mainly affecting cable) and now he is bringing the Media Bureau back into a task that had been properly off-loaded to appropriate judicial officers for resolution.

Finally, it bears noting that in December 2008, the majority staff of the House Energy and Commerce Committee issued a blistering report citing numerous problems with Chairman Martin's leadership.  It appears that Chairman Martin's response to this is not to mend his ways, but rather, to order a Christmas Eve Massacre. 

Alice awakened from her adventures in Wonderland with the knowledge that it had all been a curious and wonderful childhood dream. We should all hope that respect for the rule of law will awaken in the hearts and minds of the leaders of the new FCC, and that the industries regulated by the FCC shall not again witness the sights we have seen of late.

posted by Barbara Esbin @ 3:38 PM | Cable , The FCC

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