Attorneys representing Nexstar Media Group have appealed a $720,000 fine issued by the Federal Communications Commission (FCC) last year, saying the matter has been trumped by a recent U.S. Supreme Court decision that questions whether the agency had the authority to act in such a manner.
The situation stems from a programming-related dispute between Nexstar and Hawaiian Telcom last summer, during which several Nexstar-owned broadcast channels and cable network NewsNation were unavailable to cable TV subscribers on the islands served by the pay TV platform.
Hawaiian Telcom was forced to drop the channels after its carriage contract with Nexstar expired without a new deal in place. While both sides were negotiating toward a new contract, Hawaiian Telcom filed an initial complaint with the FCC, saying Nexstar’s refusal to accept a temporary extension of its prior contract meant the broadcaster was flouting the agency’s requirement to negotiate the matter in good faith.
While that complaint was pending, Hawaiian Telcom filed a second complaint against Nexstar, telling the FCC that the broadcaster was willing to sign a new carriage deal on condition that the cable TV company drop its initial complaint.
The FCC’s Media Bureau ultimately determined that Nexstar was not obligated to accept a request for an extension of a prior contractual agreement, but sided with Hawaiian Telcom that its demand that the cable operator drop its initial complaint was proof that the broadcaster did not negotiate in good faith in that instance.
The FCC ultimately issued a notice of apparent liability and forfeiture that charged Nexstar $720,000 for the apparent bad faith tactic.
Nexstar appealed the Media Bureau’s decision in March, saying the agency erred in proposing the forfeiture because the dollar amount appeared to be based on the size of the company.
To that end, Nexstar accused the Media Bureau of using “a series of questionable multipliers and a draconian upward adjustment that is based on no apparent rationale other than that Nexstar is a large and successful broadcaster.” Nexstar is the largest independent owner-operator of network-affiliated stations in the country, with its outlets carrying shows from all five major broadcast networks.
“Every action that the FCC and its bureaus take must be consistent with both the scope of their authority and the Administrative Procedure Act’s reasoned decision-making requirement,” Nexstar continued. “This bedrock principle applies not only to substantive determinations of whether conduct is consistent with or violates applicable law, but also to the manner in which the FCC and the Bureau assess forfeitures for alleged violations.”
In a supplemental response filed last Friday, Nexstar reaffirmed those positions, while also noting that a landmark U.S. Supreme Court decision in June effectively meant the Media Bureau acted beyond its authority.
That decision was a full reversal of the 1980s-era “Chevron deference,” which allowed federal agencies to exercise independent authority in enforcing certain rules and regulations. The Chevron deference largely held up in legal challenges to certain outcomes and new regulations that companies viewed as unfavorable to their businesses; the Court’s decision to upend it immediately drew concerns that the outcome would cast a cloud over agencies and their ability to regulate effectively.
In June, The Desk wrote that the FCC itself was under such a cloud, and that it would likely face legal challenges over unpopular broadcast and telecom-related regulations.
Nexstar is now one of the first to leverage the Supreme Court’s decision to overturn the Chevron doctrine to its benefit, writing in its supplemental brief that any complaint over its failure to follow certain federal rules or regulations during the Hawaiian Telcom situation should have been adjudicated by a court of law, not by the Media Bureau itself.
“The Supreme Court’s decision in Loper Bright made clear that under the Administrative Procedure Act, courts, not agencies, will decide ‘all relevant questions of law’ arising on review of agency action,” attorneys representing the broadcaster wrote in their brief filed last week.
They continued: “The NAL Response established that the Bureau erred in multiple respects in finding that Nexstar violated the good faith negotiation requirement and in assessing a fine of $720,000 for the alleged misconduct, and the legality of the Bureau’s decision presents a ‘relevant question of law’ that any reviewing court should decide based on its own independent judgment.”
If the Media Bureau upholds the fine, Nexstar has a number of options, to include paying the forfeiture or seeking further review in court.
