In light of yesterday’s announcement that the FCC Chairman has proposed that portions of the acquisition by Sinclair Broadcast Group of the television stations owned by Tribune Media would be designated for hearing, one question that many have asked is, “What does designation for hearing mean?”  Several decades ago, the process of designating an application for hearing was a common occurrence – used by the FCC to decide between competing applicants for new broadcast (and in some cases non-broadcast) licenses, in connection with determinations of whether or not to grant the license renewal of broadcast stations where substantive petitions or competing applications were filed against such applications, or to deal with enforcement issues when there were questions about the facts of a particular situation.  The FCC had a large staff of Administrative Law Judges who heard these cases, and they were usually quite busy.  But as the staff of ALJs at the FCC has dwindled to one, and as cases referred to that Judge are increasingly infrequent, it might be worth discussing a bit about the hearing process at the FCC.

Congress established, in Sections 309 and 310(d) of the Communications Act, the manner in which the FCC is to process applications filed with it.  In cases involving applications for new stations or for the purchase and sale of stations, applications are filed providing information required by the FCC and such supplemental information as the FCC may request.  Interested parties routinely have 30 days in which to file objections to applications, in which the petitioner needs to submit detailed allegations supported by facts either in the public record or otherwise supported by statements from those with personal knowledge of the facts, arguing why an application should not be granted.  Applicants have the opportunity to respond.  In most cases, the FCC will attempt to resolve any disputes, or any questions that it has on its own, on the basis of the written materials presented in the application, the petitions, and in response to any FCC supplemental request for information.  But Section 309(e) makes clear that, if there is a “substantial and material question of fact” or if the Commission is otherwise not able to determine that an application meets the requirements of the rules, it needs to formally designate the application for hearing.

A designation for hearing is done through an FCC order called a Hearing Designation Order.  That Order usually recites the facts of the case and discusses the problems that the FCC has with the application, and sets out a specific list of “issues” that the Judge is to consider in the hearing process.  The process by which the ALJ conducts the hearing is set out in the statute and by FCC rules.  Usually, the FCC will have its own attorneys playing a part in the case, conducting discovery (e.g. document production, depositions, interrogatories) like in any other court case, trying to get to the bottom of the specific issues presented in the case.  Other “parties in interest” in the case, usually including those who filed formal petitions to deny, will also have an opportunity to participate as parties in the case.  The FCC process allows parties to file requests to “enlarge the issues,” seeking to consider issues beyond those designated by the FCC.  As in the petition to deny process, specific facts to support any additional issues have to be provided, and the judge needs to conclude that the request raises a substantial matter that merits attention before new issues are added to those designated by the Commission.

The party whose application was designated for hearing can ask that issues be deleted from consideration in the hearing and can, before any actual trial-type hearing, ask for summary decision to resolve some or all of the issues presented based on the facts in the record or produced through discovery.  If the issues are not resolved in that manner, the ALJ will routinely conduct an actual trial-type hearing, with the Judge in a robe, witnesses being called to testify under oath as recorded by a court reporter, and cross-examination by attorneys for the other side.  After the hearing, the parties typically file “findings and conclusions” – legal briefs summarizing the facts brought out at hearing and citing the legal precedent that should be applied to those facts to advocate for the conclusions sought by the party.  The Judge takes into consideration the record of the hearing and the written arguments before rendering a decision in writing – a decision that can then be appealed to the full Commission.

As in any civil litigation, these cases can be lengthy, with discovery and other procedural wrangling taking months to play out.  Those delays are one of the reasons that the FCC has tried wherever possible to avoid actual hearings – even in some cases resorting to “paper hearings” to try to adduce the facts necessary to deal with an application (see, for instance our articles here and here about cases where the FCC ordered a paper hearing as to whether stations had been off the air for substantial periods of time during a license term were entitled to a renewal of license).  In the past, it was common for contracts for the acquisition of broadcast stations to contain a right to terminate the agreement by either party if there was a designation for hearing, given the delays and costs inherent in such a hearing.  Since hearings have been so infrequent in recent years, such clauses are probably not as common as they once were – but may be making a comeback in the near future.

The process is a relatively straightforward one, but one that is time-consuming.  We will see how that process plays out if the FCC goes forward with its hearing as previewed by the statement of the Chairman yesterday.