The First Amendment’s “Scarcity Rationale”: Elena Kagan and Media Regulation

In 1995, wearing her “academic hat,” Elena Kagan gave a speech to the National Association of Broadcasters, the Newspaper Association of America, and the Libel Defense Resource Center on the Relationship Between First Amendment Doctrine and Technological Change.

In the speech, she said something that would have been welcome to the broadcasters in the room: that the usual constitutional rationale resulting in “lesser” constitutional protection for broadcasters’ speech was senseless. Kagan told the audience:

For example, did the scarcity rationale ever make sense with respect to broadcasting? Perhaps courts should only with great forethought and caution determine that new technology demands a new legal framework.

The consequence to her assertion is simple: if this key rationale, “scarcity,” is senseless, then broadcasters like ABC and Clear Channel deserve increased constitutional protection for their speech.  And this increased protection would come from judges and Justices (such as a Justice Kagan) striking down congressional and FCC rules on broadcasters.

In mocking the scarcity rationale, Elena Kagan was disagreeing with Supreme Court majorities, as no majority has yet voted to abandon the scarcity rationale.

Kagan was, however, agreeing with the broadcast lawyers in the room.  She was also agreeing with Justice Clarence Thomas, who has devoted concurrences to attacking the rationale, siding with broadcasters.  But Justice Thomas and Kagan have many allies on this one–perhaps the majority of conservative and liberal free speech scholars at the time would have agreed that the scarcity rationale made no sense. Her statement would have been almost uncontroversial.

But, if Dean is confirmed to the Court, she will likely understand why the Supreme Court has never abandoned the rationale, despite the often off-hand academic attacks.  The real-world consequences of eliminating the scarcity rationale would be far-reaching–resulting in destabilizing the framework for communications in our society and producing outcomes adverse to individual speech rights.

These consequences are something that most speech scholars (including Kagan in 1995) generally overlook. This is  understandable as–with our specialized academic culture–many speech scholars are simply not expert in or even aware of the rules governing media, but necessarily specialize in some other important aspect of speech doctrine.

But the “unintended” consequences of eliminating the scarcity rationale are real.  The consequences include heightened judicial aggression (1) against some long-established campaign finance rules (both disclosure and access rules), (2) against government rules (with 80-years of precedent) for assigning frequencies to those who communicate wireless-ly from CBS to Verizon (paraphrasing Larry Lessig and Yochai Benkler, eliminating the scarcity rationale would make CBS “unconstitutional”), (3) against numerous media ownership limits designed to ensure that a small handful of corporations do not control the public’s sources of information, (4) against rules promoting children’s educational programming, and (5) against rules promoting noncommercial programming on satellite TV.

Indeed, while overlooking these consequences, scholars’ desire to eliminate the scarcity rationale seems targeted at exactly one 40-year-old case (called Red Lion, discussed below) that upheld a law that has now been repealed (and dead) for over 22-years.  But eliminating the far-reaching scarcity rationale to undermine Red Lion is like cutting off your fingers to clip your (already clipped) fingernails.  In fact, considering the far-reaching effects, it’s more like axing off your entire arm.  The scarcity rationale, senseless as it may seem, underpins many decisions that speech scholars–and most Americans–would strongly endorse.

I write this post in three parts.

I. I briefly explain the scarcity rationale, and do so from the point of view of its critics. Based on their understanding of the rationale, the rationale is as senseless as Kagan says.

II. I continue with real-world consequences, which are noted above.  Dozens of rules–obscure but highly significant–would be constitutionally suspect.

III. If the scarcity rationale doesn’t make sense but generally leads to good results, then a better understanding is necessary.  I briefly note what I think the scarcity rationale is really about, and which other rationales would place the many scarcity-supported pro-speech outcomes on firmer footing.

I. The Senseless Scarcity Rationale.

Many speech scholars would describe the scarcity rationale this way: government can impose rules on TV and radio broadcasters that it could not impose on pamphleteers and newspapers because of the technological scarcity of usable wireless frequencies.

If I had a radio set (or a TV with bunny ear antennas) and two or more people transmitted at 88.1 kHz, my radio set could not play any of the signals.  Rather than hearing speech, I would hear static and crosstalk.

As a result, back in the 1920s and 1930s, the US government gave licenses to certain companies to broadcast at certain frequencies, and forbade others from broadcasting without licenses. Because only a few companies received the licenses (and government kicked a lot of groups off the airwaves), the government imposed rules and guidelines on the broadcasters to ensure covered important local issues, public issues, and generally to do so “fairly.”

The scarcity rationale, importantly in this account, results in a different “standard of scrutiny” than applied to other media speech–not strict scrutiny, but often intermediate or even apparently lower scrutiny. (But neither Red Lion nor the subsequent newspaper case once references standards of scrutiny, as the standards are more recent doctrinal devices; rather, they analyzed the challenged rules and the facts, then reached a conclusion.  Some cases suggest that scarcity would be merely a fact to be weighed when applying the usual standards, while more interpret Red Lion to apply differing standards.)

Based on this account, the scarcity rationale is senseless in at least two ways.

First, almost everything is scarce, including paper and pen, so frequencies are no different.  The government usually cannot regulate who uses pens and papers–or worse, what you can write with those pens–based on their scarcity. Rather, the government just sets up markets in scarce goods.

Second, even if the scarcity of the frequencies justified initial licensing–of radio broadcasters, satellite broadcasters, wireless phone companies among others–it does not justify intrusive content regulation.

The key example here is the fairness doctrine, an FCC rule, abandoned in 1987, requiring broadcasters to cover public issues, and to present both (or many) sides of the issue.  The Supreme Court unanimously upheld the fairness doctrine in Red Lion in 1969 (the year it decided Brandenburg v. Ohio), concluding that the rights of viewers, not broadcasters, are  “paramount.”  The Court did agree that the doctrine could be unconstitutional with evidence of government silencing dissent through the doctrine.

Worse, just a few years later, in 1974, the Court unanimously reached the opposite result for newspapers–striking down a state law similar to the fairness doctrine.  Scholars argue that the two cases cannot be reconciled, as the supposed distinction (scarcity) is senseless. Therefore, broadcasters deserve the same protection from the fairness doctrine as newspapers (and, say, pamphleteers).

I’ll note two arguments that miss the point.  Some believe “scarcity” underlies broadcasting indecency rules. Other rationales are relevant there (“pervasiveness” and “unique accessibility for children”).  In Pacifica , the lead broadcast indecency case, Justice Brennan’s dissent commended the majority for this:”The [majority opinions] rightly refrain from relying on the notion of “spectrum scarcity” to support their result. … [A]lthough scarcity has justified increasing the diversity of speakers and speech, it has never been held to justify censorship.”

Second, some argue scarcity no longer exists because there are so many media outlets available to individuals. But scarcity refers to the scarcity of wireless frequencies, not scarcity of the number of media outlets.  Licensing AM stations and punishing pirates for transmitting without a license does not rest on the abundance of outlets.

I. Revolutionary Consequences of Eliminating the Scarcity Rationale.

I am not going to defend the fairness doctrine. (I am on record opposing it.)  But the fairness doctrine is, in my analogy above, the (already clipped) fingernails.

If we eliminate the scarcity rationale as Kagan suggests, and ratchet up the constitutional scrutiny for broadcasters as broadcasters argue, here are some major consequences.

1. Electoral rules.

(A) Reasonable access for candidates. Broadcasters are required to “allow reasonable access to or to permit purchase of reasonable amounts of time for the use of a broadcasting station by a legally qualified candidate for Federal elective office.” The Supreme Court held that this rule properly balances the free speech rights of broadcasters, the public, and the viewers–whose rights are paramount.

(B) Record keeping. Broadcasters must keep a record of requests by candidates or others for airtime regarding elections or national legislative issues.  In the 2004 decision, McConnell v. FEC (another part of which was overruled in Citizens United), the Court cited Red Lion for the FCC’s broad authority over broadcasters.

(2) Broadcasting would be suspect. Opponents of scarcity will argue that scarcity “no longer exists” because of new technologies enabling unlicensed uses like wi-fi. Just like air, which is not meaningfully scarce,  government should be unable to license people to speak through the air.  This conclusion, however, would eliminate broadcasters–something that would make them unhappy.  Rather, they want licenses without obligations.  But, without scarcity, the government could not assign licenses to some speakers and silence others, such as “pirate broadcasters“–and anyone else who wants to broadcast, by mobile satellite, fixed satellite, wireless broadband service, AM radio, international services coordinated with the ITU, or dedicated unlicensed like wi-fi, etc.

(Some argue scarcity no longer exists because there are so many media outlets available to individuals, but scarcity refers to scarcity of wireless frequencies, not scarcity of the number of media outlets.  Licensing AM stations and punishing pirates does not rest on the abundance of outlets.)

(3) Media ownership limits would be suspect. The government has imposed many ownership limits on broadcasters and on cable companies.  For broadcasters, these include a limit on broadcasters owning too many local or national stations, multiple networks, and forbidding newspaper owners (under certain conditions) from acquiring broadcast licenses overlapping with their newspaper-circulation areas. To be clear, in this case and others, the government’s interest was not an economic antitrust interest–it was a speech interest, which was supported by scarcity.

In the words of Justice Thurgood Marshall, writing for a unanimous court to uphold one of these rules, these rules are “designed to further, rather than contravene, the system of freedom of expression”; and to promote “the public interest in diversified mass communications.”

Broadcasters, in arguing against the scarcity rationale, have a very different view.  They argue that they should be allowed to gobble up as many stations as they see fit–just as a pamphleteer can buy as many pamphlets as he’d like.  It is the interest of the broadcaster to buy stations–not the public’s interest in diverse communications–for which they argue.

Without the scarcity rationale–something not applicable to cable systems–cable companies can challenge cable ownership limits as violating their First Amendment rights to “speak” by amassing cable holdings across the country. And, in the DC Circuit case testing FCC cable ownership limits, the court bought the argument and struck down the rules.  (The standard applied was Turner, something Kagan has also discussed.)

So eliminating the scarcity rationale would make it far more difficult to advance policies supported by Barack Obama (and others, including, historically, some Republicans) ensuring diversity of ownership among TV and radio broadcasters.

(4) Requiring children’s educational programming would be suspect. Today, the FCC provides renewal preferences to stations that air at least 3 hours a week of children’s educational programming.  (Not all of it is highly educational.)  When the FCC extended these rules to digital broadcasting, in 2004, the broadcasters appealed (to the usual DC Circuit). Without the scarcity rationale, the broadcasters might have had a strong argument that requiring “educational” programming was “content-based” and therefore unjustifiable (which I think misunderstands the content-based precedent) and interferes with editorial discretion (imagine requiring a pamphleteer to hand out children’s educational pamphlets a certain percentage of the week, or to devote a particular portion of their papers to educating children).

Because of scarcity, the rights of the viewers, including children, would be doctrinally paramount. (Disclosure: I was a lawyer on this appeal, representing the children’s groups.  We settled the case.)

(5) Noncommercial educational programming on satellite TV. When the DC Circuit confronted rules requiring 3% of capacity on private satellite TV providers be reserved  for noncommercial educational programming, the court seemed unable to uphold the rule without the scarcity rationale. The court invoked the rationale, determined that under the rationale a rule must promote the speech interests of “viewers and listeners” in diverse communications and in access to political and educational speech.  The lower court, which did not invoke scarcity, had struck down the rule.

But what about eliminating the fairness doctrine? Some might argue that it’s worth the upheaval of questioning these campaign finance, licensing, consolidation-limiting, educational and non-commercial programming rule to finally overrule Red Lion.  But so what?  The fairness doctrine (and other rules upheld in Red Lion) have been long repealed, and are sure never to return.

III.  A (Slightly) Better Way to Think About Scarcity.

The much-mocked scarcity rationale, dissed by Dean Kagan herself, has been so resilient–surviving since 1943 at least–largely because the alternative is simply unacceptable as a matter of doctrine and effect on society.  The alternative is for courts to use the First Amendment to require media consolidation and to undermine efforts to ensure Americans have access to diversified and public communications through wireless communications.

The key question is how to balance the government’s legitimate, pro-speech, interests without harming the public speech interests by permitting government censorship.  That is, how can the government pursue rules like those effectuating the public’s right “to receive suitable access to social, political, esthetic, moral and other ideas and experiences”; to ensure “the widest possible dissemination of information from diverse and antagonistic sources”; and engage in “efforts to enhance the volume and quality of coverage of public issues”–while not giving the government too broad a mandate to suppress speech.

Based on these two interests–public information and non-censorship–rules like ownership limits and some access rules should be broadly acceptable. As, indeed, they have been, though they have been acceptable based on what academics consider a “senseless” rationale.

What is not helpful, I think, is trying to map the balancing of these two interest on “standards of scrutiny,” just as we don’t feel the need to translate NYT v. Sullivan‘s “actual malice” or Brandenburg v. Ohio‘s “imminent lawlessness” into standards of scrutiny. Justice Stevens himself had criticized the over-emphasis on these standards, with regard to content-distinctions he described as pervading speech doctrine, despite pushback from Justice O’Connor and others.

So “perhaps,” as Dean Kagan said 15 years ago, “courts should only with great forethought and caution determine that new [even 80-year old broadcast] technology demands a new legal framework.”  Without that forethought and caution, there would be considerable consequences.

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