Appeals Court Strikes Down FCC Expansion Of Lowest Unit Ad Rates.

Broadcasters will not have to extend lowest unit charge rates to political parties making coordinated expenditures or joint fundraising committees with non-candidate members. That comes after a federal appeals court on Tuesday struck down the Federal Communications Commission’s expanded political advertising guidance just days before the general election rate window opens.

In a 2-1 decision, the U.S. Court of Appeals for the Fourth Circuit granted a challenge brought by four Democratics running for Congress and set aside the Media Bureau’s March directive as unlawful. The ruling delivers a clear answer to the central question that has fueled months of litigation about who is entitled to broadcasters’ lowest unit charge during the political advertising window.

“There is no question that candidates are entitled to the lowest unit charge,” the majority opinion says. But the court concludes federal law is equally clear that “neither political parties nor joint fundraising committees with non-candidate members” are entitled to lowest unit rates.

The decision comes just days before the Sept. 4 opening of the 60-day lowest unit charge window for the Nov. 3 general election.

‘Candidate’ Means ‘Candidate’

The dispute began in March when the Media Bureau issued a public notice telling broadcasters that lowest unit rate eligibility extends beyond legally qualified federal candidates to authorized committees engaged in joint fundraising with candidates, as well as advertisements qualifying as coordinated expenditures between political parties and candidates. The Bureau characterized the notice as a reminder that merely restated its previous guidance. But the four Democrats argued the FCC had instead expanded a statutory benefit Congress reserved for candidates.

The Fourth Circuit agreed, writing “the term ‘candidate’ means ‘candidate” when it comes to lowest unit rates, concluding that makes the FCC directive “unlawful” under federal law. The majority also points to an FCC decision from 1991 stating that “only candidates” are entitled to lowest until rates.

“The statutory text is unambiguous, and it provides no support for the Media Bureau’s significant and unilateral expansion of the lowest unit charge requirement,” the ruling says. The court also notes Congress could have expanded the discount to political parties when it subsequently authorized coordinated expenditures but did not.

The judges also rejected arguments brought by Republican campaign committees that a candidate appearing in an advertisement and providing the required “stand by your ad” authorization makes the ad eligible for the discounted rate.

The Fourth Circuit also rejected the FCC’s argument that the case should be dismissed because the full Commission had not yet acted on the candidates’ appeal. The court said Chair Brendan Carr’s circulation of a proposed order this month dismissing the appeal did not change that conclusion.

‘Fire Sale’ Prices

FCC Commissioner Anna Gomez welcomed the Fourth Circuit ruling, framing it as both a legal victory and an economic win for radio and television stations.

“An appeals court just moved to block the FCC’s plan to unleash new dark money spending on political broadcasting ads,” Gomez said. “This is a victory for transparency, the rule of law and for broadcasters who would've been asked to shoulder most of the costs of these dark money ads.”

Her reaction follows a dissent earlier this month in which she accused the FCC of forcing broadcasters into a political advertising “fire sale” by requiring them to “slash prices and sell their most valuable inventory during their busiest and most lucrative season.” Gomez also challenged the Bureau’s contention that it was merely putting longstanding policy in writing, saying it effectively created a new rule based largely on unwritten advice previously given by FCC staff — which his “neither legal nor an established FCC practice.”

The FCC has not yet commented, including whether it will challenge the Fourth Circuit ruling. But the Republican election committees, which had been looking to use the FCC policy to leverage their sizable war chests, signaled they are ready to appeal. With just days to go before the lowest unit rate window opens next week, that could mean seeking an emergency stay from Supreme Court.