Project Posner

Lead opinion by POSNER

1055

   POSNER, Circuit Judge. Last month we vacated the FCC's new financial interest and syndication rules but stayed our order to consider a perplexing remedial question, ignored by all but one of the parties, arising from the form of the Commission's order that we were vacating. Schurz Communications, Inc. v. FCC, 982 F.2d 1043, slip op. at 22 (7th Cir. 1992). The Commission's order had done two things: repealed the 1970 "finsyn" rules, and promulgated new rules. If we simply vacated the order, because the new rules were (as we had found) arbitrary and capricious, the effect would be to vacate also the part of the order repealing the 1970 rules. Those rules would spring back into effect. Yet no party to the proceeding in this court had defended the old rules (we 1056 thought one had, but were wrong). Such an order would therefore make everyone worse off during the period in which the Commission was deciding what to do in response to our decision. We therefore asked the parties to file supplemental briefs advising us as to the best course to follow in this unusual situation. The briefs have now been filed, and, no party having requested oral argument, we proceed to decision.

   There are five possibilities. We can--

   1. Simply vacate the Commission's order, even though one consequence would be that the 1970 rules would come back into effect;

   2. Vacate everything in the Commission's order except the repeal of the 1970 rules, so that until the Commission acted there would be no restrictions on the networks' activities in the production and distribution of television programs;

   3. Issue no order vacating the rules, but simply remand the matter to the Commission for further proceedings, during which the present rules would remain in effect;

   4. Vacate the Commission's order in its entirety but stay our order for a fixed period of time, after which it would take effect automatically unless further stayed;

   5. Vacate everything in the Commission's order except the repeal of the 1970 rules, but, again, stay our order for a fixed period of time.

   The parties appear to agree that which form of order we adopt is a matter within our discretion, though of course not a discretion to be exercised arbitrarily. Cf. International Union v. Federal Mine, Safety & Health Administration, 287 U.S. App. D.C. 166, 920 F.2d 960, 966-67 (D.C. Cir. 1990).

   Option 1 is out of the question. Not only does no one defend the old rules, but the Fox network has reasonably relied on their demise to the extent of increasing the amount of programming that it supplies its affiliates above the level permitted by the old rules. Even the coalition of outside producers and independent stations that is the most vigorous proponent of restricting network participation in programming accepts the appropriateness of remanding the case to the Commission in lieu of vacating the Commission's order in its entirety and thus restoring the old rules.

   Option 2 is also unreasonable. It would leave the networks free of any restrictions at all, even though all we held in our decision of November 5 was that the Commission had failed to offer a reasoned justification for the new rules. The networks argue in support of 2 that, given current conditions in the industry, no such justification is possible for any restrictions on the networks ' programming activities. This remains to be seen. It is not as if we had held that the Commission had no power to place restrictions on competition by networks. Its power to do so is, in fact, unquestioned. The likelihood that some set of restrictions, similar or conceivably even identical to those invalidated on November 5, will survive judicial review cannot be considered so slight that the proper interim regime would be one without any restrictions at all. Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 618-19, (1944); North Carolina v. FERC, 235 U.S. App. D.C. 28, 730 F.2d 790, 796-97 (D.C. Cir. 1984).

   Option 3--remanding the case with no limitation of time--is unacceptable because of the Commission's history of procrastination in dealing with the "finsyn" issue. Back in 1983 the Commission found that the 1970 rules were obsolete and should be abrogated, Tentative Decision and Request for Further Comments in Docket 82-345, 94 F.C.C.2d 1019, 1063-71, 1101 (1983), but it was not until 1990 that it began to consider new rules to replace them. The Commission has been worrying the issue of what production and distribution restrictions (if any) to place on the networks for more than twenty years. We have no assurance that it would not take another decade to mull over its response to our decision of November 5--meanwhile enforcing rules that we have found to be unlawful.

   In these circumstances our only defensible choice is between options 4 and 5, which 1057 differ only in the consequence should the Commission not act within the period of time that we fix. Under 4, the consequence would be that the old rules would spring into effect; under 5, that there would be no rules. The second is preferable. We are supposing a situation in which even after the Commission has had a reasonable time to formulate new or modified rules or a new justification for the current rules (that is, the rules adopted in 1991), it is unable to come up with anything. Such a default would support the networks' argument that there is no rational basis for continuing to impose any restrictions on them.

   The remaining question is the precise length of the deadline. In Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 87-88, (1982), the Court gave Congress three months to enact a new bankruptcy statute, pending which the existing bankruptcy courts, which the Supreme Court had found to be unconstitutional, were allowed to continue in operation. In Board of Trade v. SEC, 883 F.2d 525, 536-37 (7th Cir. 1989), a panel of this court imposed a slightly longer (120-day) stay of a judgment invalidating an administrative regulation. We think the longer period ample in this case. Should the FCC decide not to attempt merely to "rejustify" the existing rules, but to draft new rules, it could meet the deadline by taking 30 days to rewrite the rules, giving the interested public 45 days to submit its comments, taking 15 days to reexamine and if necessary revise its proposed rules in light of the public comments, and publishing the rules 30 days before they became effective (as the statute requires--though the period can be shortened "for good cause," 5 U.S.C. § 553(d)(3)). The schedule we have outlined may seem tight but if administrative expertise means anything, it means that after an agency has been ruminating about a problem for two decades it can act swiftly to deal with the consequences of a judicial finding that its latest regulation of the problem is unlawful. And should the Commission make substantial progress within 120 days toward a new set of rules but not be able to complete its work, it can always ask us for a stay. The burden will then be on it, as it should be, to persuade us that despite its default the networks should not be unleashed to compete in the programming market without restrictions.

   The order issued by this court on November 5 is modified to invalidate the Commission's order (and its amendment thereto) except insofar as the order abrogates the 1970 finsyn rules, and as so modified is stayed for 120 days from today. The period for asking for rehearing of either the court's original decision or today's modified order shall run from today also.