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No 'Place to Build'

DC Circuit Sympathetic in Schwab v. FCC but Focused on Site Loss

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit hearing oral argument Tuesday appeared to sympathize in part with Schwab Multimedia’s difficulty in constructing an AM station during the pandemic but also seemed to agree with FCC arguments that COVID-19 didn’t change the agency’s rules around requesting extensions for construction deadlines (docket 22-1016).

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Did the pandemic make acquisition of a new site beyond your control? I don’t think so,” Judge Patricia Millett said to BakerHostetler's Keenan Adamchak, who represented Schwab. That in 2020 COVID-19 made it difficult to get things constructed on time is “res ipsa,” said Judge Justin Walker, referencing the Latin phrase “res ipsa loquitur,” which translates to “the thing speaks for itself.” Judge Robert Wilkins was also on the panel.

Courts tend to defer to federal agencies, but the panel’s acknowledgment of pandemic issues is a sign the judges may be open to Schwab’s arguments, said Adamchak and fellow BakerHostetler attorney Davina Sashkin, who also represents Schwab, in an interview. It's always difficult to tell how a court may rule from oral argument, they said. How the court rules in the case could lead to greater clarity from the FCC on what it expects in tolling requests and waivers of construction deadlines, Adamchak said. A more standardized system would be good for all broadcasters, Sashkin said. The FCC didn’t comment.

Schwab wants the court to overturn the FCC’s denial of a construction permit extension for its unbuilt station KWIF(AM) Culver City, California, arguing the FCC arbitrarily treated Schwab differently from other broadcasters in rejecting Schwab’s contentions that construction was delayed by the COVID-19 pandemic. Schwab’s construction permit deadline was originally November 2019, but the company was granted several extensions, including one in March 2020 based on Schwab’s contention that COVID-19 shelter-in-place orders made it impossible to continue work. In September 2020, the bureau denied an additional extension, saying there was no evidence of connection between Schwab’s lack of construction and COVID-19.

The FCC has argued Schwab didn’t present proper evidence showing the pandemic slowed construction nor had it secured a site to build the station when it requested its fourth and most recent deadline extension. Adamchak told the court Tuesday that Schwab has now secured a site, and urged the court to order the FCC to act on expedited schedule to approve it, but FCC Office of General Counsel Attorney Rachel Proctor May said the record show no evidence a lease for that site has been executed.

Millett and Walker appeared to seize on Schwab’s lack of a site on which to locate its AM facilities. “You didn’t have a place to build at the time you applied for your fourth extension. Why should we give more time when you don’t have a place to build?” Millett asked Adamchak, who replied the FCC had told broadcasters it would grant extensions during the pandemic case by case. “I think I’m with you on site loss,” Walker told May.

Schwab argued the FCC had been unclear and inconsistent in its requirements for showing evidence of COVID-19-related delays and on the procedures for requesting the tolling of deadlines. “There was a lot of uncertainty going on” during the pandemic, and the agency “needed to lay out guideposts,” Adamchak told the court. Millett called the language of FCC releases telling licensees they needed to submit status reports on tolling requests “curious” but appeared to see merits in both the FCC and Schwab sides of the matter. “It doesn’t say ‘we’re suspending our usual requirements’” she told Adamchak, but Millett also pointed out to May the language didn’t specify the agency’s usual rules were in effect. “The natural read is not that if the commission doesn’t say the rule applies, you can assume it doesn’t apply,” said May.