[00:00:01] Speaker 00: Case number 12, excuse me, case number 14-1242, CBS Corporation at L petitioners versus Federal Communication Commission at L. Mr. Long for the petitioners, Mr. Gossett for the respondent. [00:00:41] Speaker 00: Robert Long representing petitioners. [00:01:04] Speaker 04: The FCC has not met its own standard for releasing highly confidential information. [00:01:11] Speaker 04: And it acted arbitrarily by allowing only five days for both FCC and judicial review of decisions to release confidential information. [00:01:23] Speaker 04: I'd like to begin, if I could, with the second issue. [00:01:26] Speaker 04: Petitioners have a right to both FCC and judicial review of media bureau decisions to disclose confidential information. [00:01:37] Speaker 04: It's common ground that review is ineffective unless it occurs before disclosure, because once the cat is out of the bag, it can't be put back. [00:01:46] Speaker 04: For at least 15 years, the FCC's policy, therefore, has been to delay release of confidential information until both the full FCC and the court have reviewed the media bureau's decision. [00:02:02] Speaker 04: Here, the FCC departed from that policy, and there are two fatal problems with its order. [00:02:09] Speaker 04: First, it didn't acknowledge that it was departing from this unbroken 15-year policy. [00:02:16] Speaker 04: So that alone is a fatal problem. [00:02:20] Speaker 04: Second, the five-day period is simply unreasonable. [00:02:25] Speaker 04: The FCC by itself is unlikely to be able to review a media bureau decision [00:02:31] Speaker 04: in five days. [00:02:32] Speaker 04: Here it took 27 days and the decision only [00:02:39] Speaker 04: Davis was pending before this court. [00:02:42] Speaker 04: So it's predictable that this court will be required to undertake emergency review if it can review the decision at all, because media bureau decisions are not typically reviewable by this court. [00:02:56] Speaker 03: Mr. Long, I want to be sure I understand exactly what you're asking us to do here. [00:03:03] Speaker 03: I read your brief is primarily focusing on the Commission's failure to explain its departure from its prior rule, right? [00:03:17] Speaker 03: But you're – as an alternative, you're arguing that you're asking us – even setting aside its failure to explain, to invalidate the rule as just arbitrary and capricious? [00:03:31] Speaker 04: Setting aside – Well, you don't have to go that far, you know, and I'm not suggesting that's an additional ground – Right, but did your brief request that? [00:03:40] Speaker 04: As opposed – Well, I think our brief argued that [00:03:50] Speaker 04: the court to say how much time is reasonable. [00:03:54] Speaker 04: I think that's actually suggested in the Commission's own rules. [00:03:57] Speaker 04: They say that they will attempt to rule on these matters within 20 days and they actually give the parties 10 days to get to the FCC from the media bureau and then 10 days to get to the court from the FCC. [00:04:13] Speaker 04: So I think there's [00:04:15] Speaker 04: guidelines in the Commission's own rules, but we're not asking the court to get into that. [00:04:21] Speaker 04: So that's the first problem with the order. [00:04:25] Speaker 04: The other problem is simply that the FCC did not meet its own fairly demanding standard, persuasive showing standard, for releasing hundreds of thousands of pages [00:04:39] Speaker 04: of highly confidential documents to hundreds of people. [00:04:43] Speaker 03: This is something that has never... Let me just interrupt you for a second to make sure I understand how the Commission's policy, confidentiality policy works. [00:04:58] Speaker 03: It's virtually all written in the passive. [00:05:00] Speaker 03: So it's hard to know, like the regulation says, [00:05:06] Speaker 03: The regulation says confidential information will not be released routinely. [00:05:12] Speaker 03: A persuasive showing will be required. [00:05:16] Speaker 03: It doesn't say who makes. [00:05:19] Speaker 03: Oh, no, it does say it. [00:05:20] Speaker 03: It says a persuasive showing as to the reasons for inspection will be required in the request for inspection. [00:05:32] Speaker 03: It sounds like the persuasive showing has to come from the entity seeking release or access to the documents. [00:05:40] Speaker 04: Is that not right? [00:05:40] Speaker 04: Well, the Confidential Information Policy says right at the beginning that this sets out the Commission's general policies for dealing with confidential information. [00:05:50] Speaker 04: And in the order, the Media Bureau itself applied this persuasive showing standard. [00:05:57] Speaker 04: So I don't think there's any dispute [00:06:04] Speaker 04: is the standard that applies. [00:06:05] Speaker 04: You're absolutely right. [00:06:07] Speaker 04: It would apply if a [00:06:09] Speaker 04: if a party were coming to the Commission and asking for them to make the information public or to disclose it to third parties. [00:06:18] Speaker 04: But it also applies when the Commission, on its own motion, decides to take information that it recognizes as confidential, there's no dispute about that, and disclose it to hundreds of third parties. [00:06:31] Speaker 04: I don't think that point is in dispute, Your Honor. [00:06:35] Speaker 03: See, the reason I ask is that the language of the policy, the only thing, this doesn't in any way hurt your case, it just seems to me the language says, the only thing the commission, when it speaks about the commission doing something, it says, when it's speaking in the active voice, it says, [00:07:00] Speaker 03: Commission has to identify, I can see two things that the Commission has to do here, has identified a compelling interest in disclosure, that's one thing, right? [00:07:11] Speaker 04: And then it says, it says, it goes on, it says the Commission... Well, you'll find this in paragraph eight of the confidential information policy. [00:07:22] Speaker 04: And I think when you get there, it's not limited, as you say, to simply situations where individuals are coming in and making a request of the commission. [00:07:32] Speaker 04: It's phrased quite generally to cover all situations. [00:07:36] Speaker 04: And again, I mean, the commission in its own [00:07:39] Speaker 04: order here didn't suggest that it was not subject to the standard. [00:07:43] Speaker 04: In fact, it admitted that it was. [00:07:45] Speaker 03: I'm asking you whether the standard is in fact higher. [00:07:49] Speaker 03: The way I read this, it says a commission has to articulate a compelling interest, and then it says, also the other phrase it uses is a necessary link in a chain of evidence that will resolve the issue before the commission. [00:08:05] Speaker 04: Yes, well, I mean, we think the necessary link standard applies, the compelling public interest standard applies, the balancing of interests. [00:08:13] Speaker 04: We read those as all the way, those are the ways the commission has fleshed out and given meaning to its persuasive showing standard. [00:08:22] Speaker 01: If you're looking at the four corners of the Bureau's order, so the Bureau's order does, in paragraph 16, talk about persuasive showing, it talks about compelling public interest, and it talks about balancing. [00:08:34] Speaker 01: So and then the commission ratifies the Bureau's order. [00:08:38] Speaker 04: It's interesting. [00:08:39] Speaker 04: It doesn't talk about necessary rec, which is another element that comes right out of their own confidential information policy. [00:08:47] Speaker 01: Right. [00:08:47] Speaker 01: So that one seems to be the one that's at least not incanted in the order. [00:08:51] Speaker 01: The rest of the standard that arguably applies to the commission itself and then the commission, I think you understandably make the argument that the commission has already owned up to that in the Bureau's order, at least the Bureau did. [00:09:03] Speaker 01: that at least those standards are said to be applied. [00:09:08] Speaker 01: There's only one part of it that you don't find in the order at all, and that's the necessary link part. [00:09:13] Speaker 04: Right. [00:09:13] Speaker 04: Well, I mean, they're all sort of listed together in paragraph eight of the confidential information policy, so I think they all apply in the fact that the media bureau order really doesn't talk about necessary link. [00:09:26] Speaker 04: I would say the reason for that is [00:09:28] Speaker 04: fairly obvious. [00:09:29] Speaker 04: It's obvious that all these hundreds of thousands of pages of documents that at the time the Commission hadn't looked at. [00:09:36] Speaker 04: Now they have looked at it. [00:09:38] Speaker 04: They presumably know a lot more. [00:09:40] Speaker 04: They can't say that all of those documents are a necessary link. [00:09:44] Speaker 04: Presumably only, you know, relatively small subset or end up to be a necessary link. [00:09:50] Speaker 04: So the fact that they left that out I think would itself be reason enough to remand this and tell the Commission you need to take [00:09:59] Speaker 04: a closer look before you do this unprecedented thing. [00:10:03] Speaker 01: Now what would you say if the way that the Necessary Link Calculus goes, according to the Commission, and I'm just hypothesizing here, is not that each individual document is necessary? [00:10:15] Speaker 01: it's that as a blanket matter it's necessary to an informed inquiry to make sure that third parties have access to these documents because otherwise we're not going to make the best informed decision and that's how we apply the necessary link standard in the context of this case. [00:10:33] Speaker 01: I don't know that that's actually happened already but I'm just asking conceptually if that's the way the necessary link standard is applied would you take [00:10:42] Speaker 01: Is it your view that that's just not consistent with the confidential information policy? [00:10:46] Speaker 04: Well, the toughest version of it would really be page by page, but you're suggesting a slightly less tough version that I think would require the Commission to do more than it did here, a lot more. [00:11:00] Speaker 04: I mean, just a simple example. [00:11:02] Speaker 04: They did come up with a few things. [00:11:04] Speaker 04: They said pricing. [00:11:05] Speaker 04: They said most favored nation clauses. [00:11:08] Speaker 04: They said exclusivity clauses. [00:11:11] Speaker 04: Well, I mean, assume that, OK, those are important. [00:11:14] Speaker 04: Let's give the FCC that. [00:11:16] Speaker 04: But they're saying give all the contracts, the whole contracts, all the provisions. [00:11:22] Speaker 04: Most of the provisions have nothing to do with those three things I mentioned. [00:11:26] Speaker 04: And all the negotiating documents, which is totally unprecedented. [00:11:30] Speaker 04: That's a huge universe of highly confidential documents. [00:11:34] Speaker 04: So at a minimum, if they wanted to say, OK, it's really necessary to know about pricing. [00:11:41] Speaker 04: say, okay, so that's, we need to have some disclosure of that. [00:11:46] Speaker 04: I mean, we think it could actually... Would you accept that? [00:11:49] Speaker 03: Well, you know, we're not talking about... [00:11:53] Speaker 03: I can understand the... I had sort of the same question I had for you about this that I did about the five-day issue, which is that, can you imagine a situation where the Commission could justify disclosing on a limited basis to third parties? [00:12:08] Speaker 03: I mean, I understand the argument that the Commission needs this information, but what you seem to say, your argument here is the burden... Commission hasn't met its burden. [00:12:18] Speaker 03: What could it say that you would be satisfied with? [00:12:22] Speaker 04: that it could meet its own [00:12:28] Speaker 04: show why we need to do this unprecedented thing or hopefully something narrower now that they've worked with the documents, why it's really necessary for commenters to participants to have these documents when almost nobody asked for them. [00:12:43] Speaker 04: Almost everybody commented and said, we don't think you should disclose any of this. [00:12:48] Speaker 04: And the three commenters who said they should or competing [00:12:53] Speaker 04: competitors who have a have a commercial interest in doing it and another thing we think they should do is balance that's a part of the test that they did address but the way they balanced was to say we have a protective order and so nothing bad will happen but nobody no company [00:13:11] Speaker 04: No government agency with their top secrets would say, well, it's okay to let hundreds of people come in and look at them. [00:13:19] Speaker 02: Let me ask you a question about the protective order. [00:13:22] Speaker 02: The protective order, as I read it and understand it, does not [00:13:29] Speaker 02: prohibit someone from, well, it prohibits people from disclosing what they read. [00:13:39] Speaker 02: It doesn't prevent them from using it. [00:13:43] Speaker 02: So in other words, if somebody seeks access to this information and signs the protective order, they could, in theory, be retained, you know, by DISH, [00:13:58] Speaker 02: you know, a year later as a consultant on a negotiation with CBS. [00:14:05] Speaker 04: That's absolutely right. [00:14:07] Speaker 04: And even as to the year later, I mean, the way the FCC handled that is they said, well, we would expect a cooling-off period of perhaps a year. [00:14:15] Speaker 04: You know, so it's very casual in a situation where the company, there are very few people in my clients' companies who are allowed to know this information. [00:14:23] Speaker 04: That's how confidential it is. [00:14:25] Speaker 04: So it's not a [00:14:28] Speaker 04: Perfect solution in their briefs, the FCC sensibly said, look, the protective orders may not be totally effective. [00:14:38] Speaker 04: So for balancing, we think they need to say, look, we've recognized it's highly sensitive information, the disclosure would be highly damaging. [00:14:47] Speaker 04: And now we're going to face up to the protective orders may not be perfect with hundreds of people looking at this and the ability to join up with DISH in a year, maybe even less. [00:14:57] Speaker 04: And so we need to say, is it really worth it to have that harm in order to show all these people when... Let me ask a follow-up question. [00:15:06] Speaker 02: If you object, what standards are used to adjudicate these objections? [00:15:13] Speaker 04: If we object to a particular person having access to a particular, let me make on that point, there was nothing when this originally came out that the objections had to be only to particular people. [00:15:29] Speaker 04: That sort of [00:15:32] Speaker 04: has put in afterwards. [00:15:34] Speaker 04: And we were in a situation where, as Commissioner Pai said in dissent, the media bureau seemed to be about to release these documents before even the FCC had looked at it. [00:15:45] Speaker 04: But I think what the FCC has now said, sort of after the fact, is for objections to specific individuals, assuming we've sort of worked out what the basic ground rules are, [00:15:58] Speaker 04: and what's necessary, balancing, and so forth, then basically you would say, well, this particular individual is engaged in business decisions, is not a proper person to look at the documents. [00:16:13] Speaker 04: So there would be that. [00:16:15] Speaker 04: And we have 22 of those individuals who are waiting at the FCC. [00:16:20] Speaker 04: For some reason, the FCC has not ruled on them. [00:16:24] Speaker 04: And if that five-day provision we started out on stays in effect, [00:16:28] Speaker 04: you know, that would all have to be looked at by the FCC and this court if it got here in a five-day period. [00:16:38] Speaker 03: Okay, thank you. [00:16:51] Speaker 05: Good morning, Your Honors. [00:16:51] Speaker 05: David Gossett for the FCC. [00:16:55] Speaker 05: The petitioners don't seriously contest that the Commission's determination, the material about the contracts between them and the applicants, the applicants and the third party programmers are relevant to the Commission's analysis here. [00:17:12] Speaker 05: This is a merger. [00:17:13] Speaker 05: These are two transactions among five of the seven largest cable and satellite companies. [00:17:18] Speaker 05: And many of the assertions about benefits from these transactions by the applicants themselves have to do with their buying power in the video programming market. [00:17:29] Speaker 05: And many of the arguments against the transactions by participants in the commission's review here have to do, again, with these same contracts. [00:17:37] Speaker 05: They have to do with arguments. [00:17:39] Speaker 03: But the question in the case is, [00:17:41] Speaker 03: Why does the Commission have to make it available to third parties to work in? [00:17:46] Speaker 03: That's the question. [00:17:48] Speaker 03: Everybody agrees the Commission can get the information. [00:17:51] Speaker 03: Why does the Commission need it? [00:17:52] Speaker 03: And as I understand it, the FTC and the Justice Department, which also review workers, do not require the disclosure of this kind of information. [00:18:05] Speaker 05: Your Honor, the FTC and the Justice Department are making prosecutorial decisions under the Hartscott-Rodino Act, which specifically precludes public access to the material. [00:18:15] Speaker 03: Right, but they can make the judgments without – they can make the assessments without – I mean, there's something unique about the way the FCC looks at these things that require them to disclose the information to third parties, whereas the other two agencies don't. [00:18:30] Speaker 05: The FCC is engaging in informal education, and under the APA and the Communications Act, participants in that proceeding normally get access to all of the relevant material. [00:18:42] Speaker 05: In fact, the FCC has never not given other participants access. [00:18:47] Speaker 03: This is confidential information. [00:18:49] Speaker 05: Yes, and that's precisely why it's being used subject to protective order. [00:18:52] Speaker 05: Indeed, the petitioners here don't disagree that the commission has routinely used protective orders in every transaction for the last 20 years, including transactions, including video programming information. [00:19:05] Speaker 05: They argue that there's more of it here, but they don't deny that we have let exactly the same material be seen subject to protective orders, and that that has been the commission's standard policy. [00:19:16] Speaker 05: May I? [00:19:17] Speaker 05: Yeah, sure. [00:19:17] Speaker 05: Go ahead. [00:19:18] Speaker 05: quote the confidential information policy statement, which is, I think, been central to a number of the court's questions here. [00:19:26] Speaker 05: What we said in that policy statement is, quote, petitioners to deny generally must be afforded access to all information submitted by licensees that bear upon their applications. [00:19:36] Speaker 05: We talked also in that policy statement about video programming contracts, and we explained that they are highly confidential, but we explained that [00:19:44] Speaker 05: such contracts may be made available subject to a protective order in situations where they are relevant to the dispute at hand. [00:19:52] Speaker 01: So do you deny that the necessary link part of paragraph 8 is applicable here? [00:19:57] Speaker 05: I think that the commission made the appropriate determination in paragraph 23 of the reconsideration order where we said that given the highly relevant nature of VPCI, we conclude that the need for interested parties to have access in order to participate meaningfully constitutes a compelling public interest for purposes of that. [00:20:18] Speaker 05: This is entirely consistent with the [00:20:20] Speaker 05: With law and precedent, it's done on a case-by-case basis as the Commission has always done so. [00:20:25] Speaker 01: So I'm not completely following the response. [00:20:28] Speaker 01: Is the response that yes, the necessary link part of paragraph 8 does apply and the order satisfies it? [00:20:34] Speaker 01: Or is it that you think that necessary link doesn't apply? [00:20:39] Speaker 05: The confidential information policy statement is a broad statement applying in many different circumstances. [00:20:44] Speaker 05: What it says about the persuasive showing is that this should be made on a case-by-case basis depending on the circumstances. [00:20:51] Speaker 05: That's paragraph 16, which also said that one of the reasons why confidential information should be disclosed in some circumstances is, quote, to ensure fairness to other parties in a proceeding. [00:21:01] Speaker 05: So I mean, I think the necessary link [00:21:05] Speaker 05: flows back from the fact that the commission has balanced the interests of third parties, and the interests of the applicants, and the interests of fairness, and has determined, as it has always determined in every circumstance, that all relevant material in a record should be provided to third party subjects. [00:21:23] Speaker 05: But there's never been a [00:21:25] Speaker 01: No, but there seems to be, at least semantically, and maybe there's something else going on here that I'm not following, but at the very least semantically, it seems like there's a delta between relevant and necessary. [00:21:37] Speaker 01: And what the order says several times, it's relevant, it's highly relevant. [00:21:41] Speaker 01: the policy says it needs to be a necessary link. [00:21:45] Speaker 01: Now I think it's subject to the reading that Judge Tatel had earlier, which is that a lot of this, it's not even clear that the standards necessarily apply to the commission itself, but we're past that because the Bureau's decision puts the, embraces those standards. [00:21:58] Speaker 01: And so I think we're in a land where we assume that the necessary link standard does apply. [00:22:02] Speaker 01: No, I think we're in a world where we assume the persuasive showing standard applies, which is what flows out of the regulation that the Commission uses, and that's what... It says necessary link, and maybe necessary link is part of persuasive showing, but your own policy, which the Bureau's decision assumes applies, requires, and it not only just says necessary link, it says [00:22:25] Speaker 01: The commission is here to policy of not authorizing disclosure of confidential financial information on the mere chance that it might be helpful, but insists upon showing that the information is a necessary link in the chain of evidence. [00:22:34] Speaker 01: So it seems like that standard either does apply or it doesn't. [00:22:38] Speaker 05: That standard does not apply. [00:22:40] Speaker 05: Those cases are about [00:22:42] Speaker 05: informal rulemakings in the context of an adjudication. [00:22:45] Speaker 05: I mean, as this court explained, for example, in the independent U.S. [00:22:49] Speaker 05: tankers case that we cite, some opportunity for interested parties to be informed of and comment upon the relevant evidence for the agency. [00:22:57] Speaker 01: Did you say in your brief that the necessary link [00:23:00] Speaker 01: This is news to me, but maybe I missed something. [00:23:02] Speaker 01: Is that necessary link actually doesn't apply to this procedure? [00:23:05] Speaker 05: I don't think any party discussed the necessary link language. [00:23:08] Speaker 01: No, their brief, maybe I'm completely misremembered, but I think their brief makes quite an issue of the fact that necessary link is part of the standard and that's the one part of the standard that the order doesn't and can't. [00:23:19] Speaker 05: What the order in Cairns, Judge Srinivasan, is that the Commission has made the determination on a categorical basis that this information is relevant. [00:23:29] Speaker 05: That's the necessary link, I guess I would say. [00:23:32] Speaker 05: The categorically relevant video programming information is relevant to the analysis of the issues presented to the Commission. [00:23:40] Speaker 01: But isn't there a difference between relevant and necessary? [00:23:43] Speaker 01: And maybe one frame of reference is the Quest case. [00:23:47] Speaker 01: So the Quest case, the commission said that the information would greatly assist. [00:23:52] Speaker 01: And then this court sent it back by saying, well, greatly assist doesn't mean require. [00:23:59] Speaker 01: And that seems somewhat parallel to saying highly relevant versus necessary. [00:24:03] Speaker 05: So the Quest case, as I read it, holds that the commission behaved arbitrarily and capriciously by releasing information in a fashion that was inconsistent with the confidential policy statement. [00:24:15] Speaker 05: Yeah. [00:24:15] Speaker 05: Here, the confidential policy statement says that petitioners to deny get access to material, to get access to all information submitted. [00:24:24] Speaker 05: So there's no inconsistency with, I mean, that's paragraph 33. [00:24:27] Speaker 05: But it says it only if there's a necessary link shown. [00:24:29] Speaker 05: No, it says, no, it does not. [00:24:31] Speaker 03: I mean, paragraph 33 of the- I'm looking at the policy itself. [00:24:35] Speaker 03: And as I said, half of this is written in the past, so who knows what the commission's talking about. [00:24:40] Speaker 03: But the one sentence that's active talks about the commission. [00:24:43] Speaker 03: And it says, the Commission has adhered to a policy of not authorizing disclosure of confidential information on the mere chance that it might be helpful, but only on a showing that the information is necessary link in a chain of evidence. [00:25:00] Speaker 03: That's what that says. [00:25:03] Speaker 01: That's paragraph eight. [00:25:04] Speaker 03: Yes, I have paragraph eight in front of me. [00:25:07] Speaker 05: Again, the policy discusses a huge array of circumstances. [00:25:12] Speaker 03: Can we just focus on this sentence? [00:25:16] Speaker 03: With that sentence there, focused on the commission, explain to me how the commission can make a judgment requiring disclosure without making that essential link finding. [00:25:30] Speaker 03: How can I do that? [00:25:32] Speaker 05: I think the Commission has done so here because it is such a trouble. [00:25:35] Speaker 03: Okay, but now we're going to see, it's two different questions. [00:25:37] Speaker 03: Question one is, does it have to do that? [00:25:40] Speaker 03: I understood from your answers to Judge Srinivasan that it didn't. [00:25:45] Speaker 03: That's why I asked you about this language. [00:25:48] Speaker 03: Okay, so let's deal with that issue first. [00:25:50] Speaker 03: Does it have to make that claim? [00:25:52] Speaker 05: I think the Commission has made that link. [00:25:54] Speaker 05: I don't think it's necessary to determine whether it hasn't, because of course the Commission, under Shriver and Section 4J of the Communications Act, the Commission gets to decide how to handle proceedings before it and can do so including on an ad hoc basis in a specific circumstance. [00:26:11] Speaker 03: Did it violate its own rules? [00:26:13] Speaker 05: It did not violate any rules. [00:26:14] Speaker 03: Well, that's the question. [00:26:15] Speaker 03: We're asking you whether this essential link finding has to be made. [00:26:22] Speaker 03: If it's in the policy statement, the commission has to do it, correct? [00:26:25] Speaker 05: It's a policy statement. [00:26:26] Speaker 05: But the policy statement says many things. [00:26:28] Speaker 05: And it also says specifically that all relevant evidence will be given to participants in the party. [00:26:36] Speaker 03: Relevant, as Judge Trina Lawson pointed out, is a very different standard than the necessary link. [00:26:43] Speaker 05: Paragraph 16 of the policy statement explains that how you make the persuasive determination is decided on a case-by-case basis because it requires a balancing, and I'm quoting, of the type of proceeding, the relevance of the information, and the nature of the information. [00:27:01] Speaker 05: Here, the type of proceeding is an adjudication where, again, every time the Commission has engaged in the review of a merger, it has allowed third parties access to all material. [00:27:13] Speaker 03: Okay, so the next question is, you said even if it isn't required, the Commission's made the finding, correct? [00:27:20] Speaker 05: Yes, Your Honor. [00:27:21] Speaker 03: What is it? [00:27:23] Speaker 05: The Commission has made the finding that the video programming information is highly relevant to the issues before the Commission. [00:27:30] Speaker 05: The Commission is reviewing mergers among buyers of video programming, among five of the seven largest cable and satellite companies. [00:27:41] Speaker 01: So that presupposes that in your view the highly relevant means the same thing as necessary. [00:27:46] Speaker 05: For purposes of the evidence in a formal adjudication, yes. [00:27:53] Speaker 01: And so if one were to think that highly relevant did not mean the same thing as necessary and that necessary is required, is there something in the order that would nonetheless get you passed? [00:28:07] Speaker 01: the necessary, the presumably applicable necessary criteria. [00:28:11] Speaker 05: It also uses the word critical. [00:28:12] Speaker 05: I mean, as this court explained in SBC, the commission is fully capable of determining which documents are relevant to its decision-making in an adjudication. [00:28:21] Speaker 05: It has determined that as a category, the video programming information is relevant to its determination. [00:28:28] Speaker 05: And frankly, the third party programmers have not really challenged that. [00:28:36] Speaker 05: I mean, they acknowledge that we need to see the material. [00:28:39] Speaker 05: Their only question is whether we should also allow the challengers to the transactions to see the material. [00:28:45] Speaker 02: And that's where... But they say you can see the material by reviewing that justice, right? [00:28:50] Speaker 05: We have, we could see the material to review it at justice to determine if it is relevant. [00:28:56] Speaker 05: So that's what happened in both SBC and in Consumer Federation. [00:29:00] Speaker 05: We looked at documents to determine whether they were relevant. [00:29:05] Speaker 05: But once we determined that they were relevant, we brought them into our records and we made, we gave third parties access to those documents. [00:29:13] Speaker 02: What about SBC and the verse? [00:29:15] Speaker 02: What about NBCUniversal that's discussed in Petitioners' Group? [00:29:18] Speaker 05: In that also, we determined that certain documents were not relevant and didn't include them in the record, but we determined that other documents were relevant, including video programming contracts, and that material was given to third parties subject to protective order. [00:29:31] Speaker 05: That was a very different transaction. [00:29:33] Speaker 05: That was a vertical transaction between [00:29:36] Speaker 05: a cable company and a programmer, and so the contracts with other programmers were less relevant to the analysis and people weren't making arguments about them. [00:29:45] Speaker 05: There were, on the other hand, contracts between those two companies that were in the record, there were contracts between NBCU and other cable companies that were in the record, and third parties saw those materials. [00:29:58] Speaker 05: It's true, these documents with third party programmers weren't there because no one was making arguments that depended on those documents. [00:30:05] Speaker 05: Here they are, and every time there have been documents relevant to any question before the commission, we have allowed third parties to see them subject to protective order. [00:30:14] Speaker 05: That's what protective orders are for. [00:30:16] Speaker 05: That's how we interpret section 309 of the Communications Act, which says that third parties have a right to participate. [00:30:23] Speaker 05: It's what the APA says. [00:30:25] Speaker 01: It's what the policy statement says. [00:30:29] Speaker 01: that 309 presupposes interested parties get to participate. [00:30:33] Speaker 01: So you have kind of two strands to your argument. [00:30:35] Speaker 01: One is that this information is highly relevant and will really help us. [00:30:38] Speaker 01: The other is that unless we give third parties access to it, we're vulnerable to a challenge, arbitrary and capricious or a challenge under the statute that interested parties will not have access to information. [00:30:47] Speaker 01: But one thing that seems odd about this is that the interested parties actually don't ever see the information. [00:30:55] Speaker 01: because it's a representative of the interested party that sees the information. [00:30:59] Speaker 05: Is there a council, of course? [00:31:00] Speaker 01: Yeah, outside council or a consultant, which it just seems there seems to be a gap here because if the argument is that the statute requires that interested parties be able to see the information, which makes sense, [00:31:14] Speaker 01: But then the interested party itself actually never gets to see the information. [00:31:17] Speaker 01: It's counsel for interested party to get to see the information. [00:31:20] Speaker 01: Then I can certainly understand as a matter of privacy interests and confidentiality why that accommodation is made. [00:31:26] Speaker 01: I don't dispute that for a moment. [00:31:29] Speaker 01: But if the explanation is that we need the interested party to see it so that we can get the benefit of the interested party's input, and the interested party is the relevant party for purpose of the statute, but that party actually never gets to see it, then isn't there a gap? [00:31:41] Speaker 05: No, Your Honor, because the actual third parties get to talk to their counsel. [00:31:47] Speaker 05: They don't get to see the material. [00:31:50] Speaker 05: And Judge Wilkins, paragraph 12 of the order specifically says that third parties may not use the material for any other purpose. [00:31:59] Speaker 05: These are extraordinarily complicated contracts. [00:32:01] Speaker 05: I mean, I'm told that the contract between a programmer and a cable company can be in as many as 50 separate documents. [00:32:08] Speaker 05: So the third party, the participants can talk to their counsel about what to look for. [00:32:14] Speaker 05: They can explain what the issues that they think will be present are. [00:32:19] Speaker 05: The counsel can discuss it in broad terms without revealing confidential information. [00:32:24] Speaker 05: And in the end, this is the way the Commission determines to balance these issues. [00:32:31] Speaker 05: I didn't say that Section 309 mandates this. [00:32:35] Speaker 05: I said that the Commission, based on Section 309 and the APA and the confidential information policy and its long practice of how it reviews these transactions, thinks this is the right way to do it. [00:32:48] Speaker 05: We want this third party comment because we think it will be helpful to us. [00:32:54] Speaker 05: And that determination is one that is the commissions to make under Section 4J. [00:32:58] Speaker 05: I mean, that's what the Schreiber case stands for, is that, yes, confidential information [00:33:04] Speaker 05: is confidential, but we are the people who should be balancing those interests. [00:33:09] Speaker 05: And in this circumstance, with these transactions among these major companies, we think the appropriate way to balance that is to allow third parties who are participating and are challenging these transactions to see the material subject to very robust protective orders. [00:33:27] Speaker 05: If I can turn to the five-day rule for one minute, it is not a five-minute rule. [00:33:35] Speaker 05: That is a reasonable exercise of the Commission's discretion in here. [00:33:42] Speaker 05: Time is of the essence in merger reviews, and the Commission reasonably balanced the interests of objectors, who objections have already been denied by the Bureau. [00:33:52] Speaker 03: No, no, excuse me, since you want to do this quickly. [00:33:55] Speaker 03: Their argument, they're not challenging it substantively. [00:33:58] Speaker 03: They're saying the Commission failed to explain its change in policy. [00:34:01] Speaker 03: That's what you need to focus on. [00:34:04] Speaker 05: They're making both arguments, I think, Your Honor. [00:34:06] Speaker 05: As to the explanation, the Commission, the Bureau clearly explained in paragraph, sorry, Your Honor, [00:34:20] Speaker 05: 36 of the reconsideration order, why they were making this change. [00:34:24] Speaker 05: They were making this change because they didn't think it was appropriate for parties to be able to preclude the effective participation of others in the transaction. [00:34:34] Speaker 05: It's important to understand that this objection process has always existed. [00:34:39] Speaker 03: It was only in these transactions, though, that third parties... What in paragraph 36 would tell Reader that [00:34:49] Speaker 03: that the commission was aware that it was changing its policy. [00:34:53] Speaker 05: Quote, we hereby amend paragraph eight. [00:34:56] Speaker 03: Yeah, paragraph eight, right. [00:34:57] Speaker 05: Paragraph eight of the protective order is the paragraph that had previously provided that there was a stay was longer. [00:35:04] Speaker 03: That's it. [00:35:05] Speaker 05: That is the assertion that we are changing. [00:35:07] Speaker 03: Also, in the initial paragraph... I just want to make sure I understand the commission's position. [00:35:14] Speaker 03: So when we look for our standard, when we apply our standard in this case, for an agency to change, it needs to be aware of and engaged... In paragraph... Can I just finish my question? [00:35:25] Speaker 05: Sorry, Your Honor. [00:35:26] Speaker 03: If we apply that standard, then your answer to us is that this sentence in paragraph 36 satisfies that standard. [00:35:36] Speaker 05: We also in paragraph one said we make a minor modification to the order. [00:35:41] Speaker 03: Okay, those are the two. [00:35:42] Speaker 05: Those are places where we said that we were changing our rules, we explained the change, and the change here makes sense. [00:35:49] Speaker 01: I mean, there's a difference between saying that you're amending the initial order and saying that you're changing commission, something that's been consistent in orders across time. [00:35:58] Speaker 05: A change is a change. [00:36:00] Speaker 05: A change from what? [00:36:01] Speaker 05: The reason the change happened here was this is the first time third parties had an opportunity to object to someone having access to material. [00:36:10] Speaker 05: Before it was always the applicants were objecting and they had every interest in expedition. [00:36:14] Speaker 05: Here, once third parties were able to object, we saw that they could [00:36:17] Speaker 05: Their only interest is in confidentiality, and their objections could have waylaid the entire processing of these transactions. [00:36:25] Speaker 05: But the purpose of the objection process is about narrow factual questions, whether someone is involved in confidential decision-making. [00:36:35] Speaker 05: negotiating contracts, that question is one that, as intervener NAB says, this is a small bar. [00:36:43] Speaker 05: People will know. [00:36:44] Speaker 05: And in fact, there has never been a court case about one of these. [00:36:49] Speaker 05: In fact, as far as I'm aware, there has only ever once been even an application for review with the commission filed as to the decision granting or denying someone access to material. [00:37:01] Speaker 05: This is a non-issue. [00:37:03] Speaker 05: Then why have five days? [00:37:05] Speaker 01: Make it five minutes. [00:37:07] Speaker 05: I mean, that just... Five days was what the commission thought was a reasonable period of time, five business days. [00:37:13] Speaker 05: If the court thinks that it needs seven or 14, I mean, I'm sure we could accommodate that, but the point is the commission decided that it did not see need to stay a release of information pending its own review, and that's clearly its own determination, and it thought that five days was adequate for the [00:37:33] Speaker 05: objector to seek a stay with someone. [00:37:36] Speaker 03: And if there is a serious question... You're way over time. [00:37:38] Speaker 03: I'm sorry, Your Honor. [00:37:39] Speaker 03: You've got it all now. [00:37:40] Speaker 03: Okay. [00:37:40] Speaker 03: Thank you. [00:37:42] Speaker 03: Let's see. [00:37:43] Speaker 03: Did Mr. Long have any time left? [00:37:46] Speaker 03: Mr. Long, you can take two minutes. [00:37:53] Speaker 04: Very quickly, Your Honor, on the necessary link point, again, I'm going back to paragraph eight of the FCC's own [00:38:02] Speaker 04: confidential information policy, they set out persuasive showing, they set out balancing, they set out compelling public interest, and then this is their own language. [00:38:13] Speaker 04: Even in such circumstances, that is, where there's a compelling public interest in disclosure, the Commission does not automatically authorize public release. [00:38:22] Speaker 04: Rather, the Commission has adhered to a policy [00:38:26] Speaker 04: of not authorizing the disclosure of confidential financial information on the mere chance that it might be helpful, but insists upon showing that the information is a necessary link in a chain of evidence that will resolve an issue before the Commission. [00:38:41] Speaker 04: So we think that's the Commission's own policy that it's adhered to, and they didn't show that they've adhered to it here. [00:38:52] Speaker 04: We don't think they have. [00:38:53] Speaker 04: So we think that's the [00:38:55] Speaker 04: the simplest reason why the decision to disclose should go back. [00:39:01] Speaker 01: It is... Mr. Gassa did point out that the order also says critical. [00:39:05] Speaker 04: I'm sorry, Your Honor. [00:39:06] Speaker 01: I think Mr. Gassa pointed out that the order also says critical in one portion. [00:39:11] Speaker 04: Well, you know, and again, that [00:39:25] Speaker 04: a lot like necessary. [00:39:28] Speaker 04: I mean, all they referred to, as I said earlier, were a handful of provisions. [00:39:34] Speaker 04: That does not show that all these hundreds of thousands of pages, every single email about every aspect of every agreement is necessary or critical. [00:39:45] Speaker 04: It's at most a small subset. [00:39:48] Speaker 04: I think, frankly, what is going on here is kind of crowdsourcing. [00:40:00] Speaker 04: be a good thing, but there's no suggestion that the FCC staff is not capable. [00:40:06] Speaker 04: And, you know, again, under the FCC's own policy, there are these very strong countervailing interests. [00:40:13] Speaker 04: Thank you. [00:40:14] Speaker 03: Thank you. [00:40:15] Speaker 03: Case is submitted. [00:40:16] Speaker 03: We'll take a brief recess to let the courtroom clear out here.