Latest AT&T/BS Merger Twist, and Why Bill Kennard Case is Different from Robert McDowell’s

In the latest chapter of the FCC’s most gripping “telecomnovella” Death Star Reborn: The AT&T/BellSouth Merger, FCC Chairman Kevin Martin has set in motion the process to get 3rd Republican Commissioner Robert McDowell “unrecused”. The FCC has been deadlocked 2-2 because Commissioner McDowell used to represent CompTel, one of the groups opposing the merger, creating a conflict of interest. (You can see my previous coverage explaining all this here.)

McDowell, while not champing at the bit to be unrecused, has announced he’s ready to serve if the FCC’s General Counsel tells him he has to vote to break the deadlock. So it becomes possible to get this done before the new Congress takes over. Although why this should be such a big deal is beyond me, since it’s not like Congress can directly interfere with FCC merger review, and the indirect threats for payback are already on the table.

Martin, conscious of the controversial nature of the move, wrote a letter to the Chairs and ranking members of the Senate and House Commerce Committees explaining the need for such extraordinary action. In doing so, Martin observed that the FCC General Counsel had previously authorized former FCC Chairman William E. Kennard to break a 2-2 deadlock despite Kennard’s previous recusal.

Now some months back, when folks first started wondering about the “McDowell Option,” I opined that while the FCC General Counsel could force McDowell to vote, such a move would be “extraordinary” and “To the best of my knowledge, it has never happened.” So what’s all this about Kennard then?

Art Brodsky does an excellent job explaining why the Kennard situation was radically different. But, my honor being involved and all, I decided to dig a bit deeper. As explained below, the facts on the Kennard case were so bizzare and different (starting with the fact that Kennard had not been legally required to recuse himself in the first place but had done so, in his own words “out of an abundance of caution”), that I still think my original statement stands and that, if the FCC unrecuses McDowell, and requires him to vote, it’s really breaking new ground.

More detail than you could possibly want (including a timeline and relevant quotes from Kennard’s public statement in 2000 on unrecusing himself) below….

The whole business with Kennard recusing himself and then coming back in 2000 had its roots in an FCC proceeding that began in 1983. Until the Reagan administration, the FCC required that broadcasters cover news of interest to their local community and also issued regulations to prevent broadcasters from abusing their local government monopolies on radio and television broadcasting. This set of rules and obligations and general FCC requirements was called the fairness doctrine. The FCC did codify some of the rules, including the rule giving a right of reply to anyone personally attacked (the Personal Attack rule) and a right to respond to a broadcast editorial (the Political Editorial rule).

The Reagan administration, especially Reagan’s FCC Chair Mark Fowler, set out to deregulate broadcasting as much as possible. The National Association of Broadcasters (NAB) therefore petitioned the FCC to eliminate the Personal Attack and Political Editorial rules. At the time, Kennard worked for the NAB and was involved in the proceeding.

The FCC never finished the specific proceeding, but it did repeal the overall fairness doctrine in 1987. The NAB then demanded that the FCC repeal the PA and PE rules as well, since they derived from the Fairness Doctrine. The FCC sat on this for another 10 years until the RTNDA went to the D.C. Circuit and asked it to issue a writ of mandamus (or, as we lawyers say, “bitch slap”) against the FCC to mandate repeal of the rules. The FCC then promised to decide the matter but, owing to the fact they were short a Democrat, ended up deadlocked 2-2.

Then in 1998, the FCC had just about a completely new line up and was once again 3 Ds (Kennard, Ness, Tristani) and 2 Rs (Powell, Furchgott-Roth). So once again, the FCC tried to resolve the issue. But Kennard recused himself, since he had worked for the NAB and been invovled in the original NAB petition and response in 1983. So once again, the the FCC ends up 2-2

As Kennard would later explain:

“I asked our Designated Agency Ethics Officer (DAEO) whether I should recuse myself from the FCC proceeding reviewing the FCC Personal Attack and Political Editorial rules because I had participated in it in the early 1980s on behalf of the National Association of Broadcasters (NAB). I was advised that there is no statute or rule prohibiting my participation, but that a regulation issued by the Office of Government Ethics (OGE), applicable to all federal employees, directs an employee to consider whether there are circumstances that “would raise a question regarding his impartiality.” 5 C.F.R. § 2635.502(a). Various factors are considered in determining whether a reasonable person would question a federal employee’s impartiality, and our DAEO concluded, under the facts of this case, that a reasonable person would not seriously question my impartiality, particularly because of the length of time that has passed since I worked for NAB and the fact that I have no personal financial stake in the matter.” (Emphasis added)

So, you may ask, why on Earth did Kennard recuse himself? Sounds like he had a total clean bill of health from the relevant federal official and was good to go. In Kennards own words:

“Nevertheless, out of an abundance of caution, I decided not to participate.”

In other words, unlike the situation with Robert McDowell, who freely admits to a genuine conflict of interest that would require extraordinary FCC action to resolve and even then would require McDowell to get a clean bill of health from the Virginia Bar, Kennard had no conflict of interest or reatriant on his participation. He voluntarily chose to sit out the relevant FCC proceeding “from an abundance of caution.”

So what changed Kennard’s mind? We rejoin our story in 1999. The D.C. Cir. finally gets ahold of this in a case called RTNDA v. FCC. The D.C. Cir. decides that the FCC has not justified keeping the rule and remands the matter back to the FCC with a stern warning to get something done on this pretty darn quick or the court will get really, really pissed and take matters out of the hands of the FCC.

But the FCC, still split 2-2, can’t get its act together to do anything. So the RTNDA appeals again for a writ of mandamus. This time, the D.C. Cir. says it will consider mandamus if the FCC takes no action by September 29, 2000.

So, with September 29 fast approaching, Kennard re-evaluated and concluded that “the public interest, and the efficient conduct of FCC business, now outweighs the reasons for my cautionary recusal.” (Emphasis added.)

Again, it is useful to observe the differences between Kennard’s situation in 2000 and the FCC’s situation here. Kennard unrecused himself, which he had every right (indeed, arguably a responsibility) to do, because no real conflict existed. By contrast, it is Martin who wants to see McDowell come off the bench, despite a real statutory barrier unless the FCC General Counsel (as DAEO) tells McDowell he has to vote. Martin does not face a court imposed deadline to decide this. And, unlike in 1998 and 2000, it appears here that Martin and the Ds are working toward a compromise deal. If it takes a few more weeks, and if Martin has to give a little more, there is really no harm.

By contrast, Kennard’s refusal to participate ended up sinking the personal attack and political editorial rules. The FCC did not act until October 4, 2000, after the court imposed deadline and after the court had finally had enough. On October 11, 2000, the D.C. Circuit issued the writ of mandamus and vacated the rules.

To conclude: If the FCC wants to unrecuse McDowell, it should really have to produce better precedent than the Kennard case to back up its claim that the FCC has done something like this before to break a deadlock. I’m not sure that anyone has legal standing to challenge an FCC determination to unrecuse McDowell, but it seems like a damn fool thing to risk a merger on when a few more weeks of talking might settle the matter.

Stay tuned . . . .

Pre-1983 NAB files petition for rulemaking to eliminate Personal Attack and Political Editorial rules.

1983: FCC issues NPRM to eliminate rules, MM Docket No. 83-484

1985: FCC indicates that it will repeal fairness doctrine if it finds that the Fairness Doctrine is not mandated by statute. Fairness Report, 102 F.C.C.2d 142, 246 (1985).

1986: D.C. Cir. finds Fairness Doctrine derives from public interest standard and is not mandated by statute. Telecommunications Research & Action Ctr. v. FCC, 801 F.2d 501, 517-18 (D.C.Cir.1986).

1987: FCC Announces in Syracuse Peace Council it will no longer enforce the Fairness Doctrine. Syracuse Peace Council, 2 F.C.C.R. 5043 (1987), recon. denied, 3 F.C.C.R.2035 (1988).

In repealing the fairness doctrine, however, the FCC did not repeal the Personal Attack rule or Political Editorial rule.

1987: NAB files a Petition for Expedited rulemaking to determine the impact of Syracuse Peace Council on the PA and PE rules. FCC takes no action.

1989: D.C. Cir. affirms FCC determination to repeal fairness doctrine. Syracuse Peace Council v. FCC, 867 F.2d 654, 656 (D.C.Cir.1989).

1990: NAB files second “expedited petition for rulemaking” renewing arguments in 1987 petition. FCC takes no action.

1996: NAB files for Petition for Mandamus with DC Cir.

1996: FCC issues public notice to refresh record.

1997: DC Cir. dismisses petition for writ of mandamus without prejudice

1997: FCC issues public notice that it is deadlocked 2-2, as the Commission is short one member. The Ds (Hundt & Ness) vote to retain rule, Rs (Quello & Chong) vote to repeal rule.

1997: NAB files new Petition for Writ of Mandamus with DC Cir.

1998: FCC. now at 5 members (Kennard, Ness, Tristani, Powell, Furchgott-Roth), again attempts to vote. Kennard recuses self because he signed the original 1983 Petition for Rulemaking. FCC again splits 2-2.

1998: D.C. Cir. holds that 2-2 vote constitutes final agency action subject to review, requires Ds to submit joint statement on why rules are not repealed as part of repeal of Fairness Doctrine. (Public Notice of Separate Statements)

August 1999: D.C. Cir. holds in RTNDA v. FCC, 184 F.3d 872 (D.C. Cir. 1999) that action in Syracuse Peace Council did not, of its own force, repeal the Personal Attack or Political Editorial rules. However, joint statement of Ness and Tristani in support of rules failed to adequately justify rules in light of FCc’s previous determination in 1983 NPRM to eliminate rules and 1987 decision in Syracuse Peace Council. D.C. Cir. remands to FCC for justification of rules and whatever new proceeding the FCC considers necessary, but admonishes FCC that lengthy delay requires quick resolution.

July 6, 2000: FCC still takes no action, NAB renews request for mandamus to vacate rules.

July 24, 2000: D.C. Cir. holds Petition in abeyance, but sets a deadline for FCC action of September 29.

October 2: Broadcasters file emergency motion for mandamus relief.

October 3, 2000: FCC issues notice of new proceeding. 15 FCC Rcd. 19973. The Notice states in pertinent part:
“On account of the continuing deadlock, the Chairman decided, after the court’s order of July 24, to participate in this matter for the purpose of initiating a proceeding to update the record.”

October 11, 2000: DC Cir. issues writ of Mandamus. RTNDA v. FCC, 229 F.3d 269 (D.C. Cir. 2000).

October 26, 2000: FCC officially repeals rules and terminates MM Docket No. 83-484.

Comments are closed.