Choosing Between the Necessity and Public Interest Standards in FCC Review of Media Ownership Rules

Article Source: Michigan Law Review, Vol. 106, No. 1, pp. 101-133, 2007
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This article discusses the proper standard of review for reevaluation of media ownership rules by the FCC.


Policy Relevance:

The standard of review used in assessing the FCC’s media ownership rules affects administrative efficiency by determining how closely the FCC must scrutinize its rules every four years.


Key Takeaways:
  • Every four years the Federal Communications Commission (FCC) must reevaluate its media ownership rules.
  • The proper standard of review to be used during that reevaluation is not clear because the Telecommunications Act of 1996, which requires the periodic review, is ambiguous.
  • “Standard of Review” is a term that defines the proper level of scrutiny that should be used in a given situation. There are two possible standards that could apply to the FCC’s review of media ownership rules.

    • Public Interest Standard – only requiring the FCC to show that the regulation advances one of the FCC’s public interest goals: compensation, diversity, or localism.
    • Necessity Standard – requiring that the FCC show that the rule in question is indispensable for maintaining compensation, diversity, or localism.
  • The legislature, in drafting the Telecommunications Act, was not clear in what level of review should be used. Thus, it is left to the courts to determine until the legislature sees fit to clarify the ambiguity.
  • The public interest standard is the more appropriate standard of review for four reasons.

    • Prior court decisions have already used the public interest standard, setting a judicial precedent.
    • Other similar areas of administrative law suggest using a low standard of review for this type of periodic assessment by a regulatory agency.
    • A Public Interest Standard allows the FCC to simultaneously implement a cost benefit analysis, which is consistent with requirements implemented by both Congress and the executive branch.
    • Policy considerations, such as potential conflicts of interest and administrative efficiency, suggest use of the less strict standard of review.



Peter DiCola

About Peter DiCola

Peter DiCola is an associate professor at Northwestern University School of Law. He received his J.D. as well as his Ph.D. in economics from the University of Michigan. His research has centered on the music industry and related industries. Currently, he is focusing on copyright law’s regime for digital sampling and deregulation in the radio industry. He uses empirical methods and applied economic models to study intellectual property law, media regulation, and their intersection.