Court challenges of CRTC regs expected following Supreme Court decision

The Supreme Court's decision that quashed the CRTC's value for signal regime narrowed the commission's authority under the Broadcasting Act, potentially affecting a range of policy powers from establishing signal rights to intervening in competition issues, industry sources said. The Wire Report interviewed six broadcasting industry sources familiar with the decision who asked not to be identified because they were not authorized to speak publicly about the subject. They said the Supreme Court's 5-4 decision last week, Cogeco Cable Inc. v. Bell Media Inc., which ruled the CRTC does not have the jurisdiction to implement a value for signal policy to compensate local TV stations for the carriage of their signals, will limit the commission's powers to introduce economic polices under the Broadcasting Act. Broadcasting companies' legal shops are analysing the decision and drafting lists of CRTC broadcasting policies and regulations, identifying them as safe, not safe, or vague under the law, two people said. “There are lists, and there are priorities of what you want to go after and when,” one person said, referring to potential legal challenges of CRTC regulations resulting from the decision. The people, who have knowledge of the CRTC's legal powers, said the Supreme Court decision diminished the commission's ability to rely on broad policy objectives laid out in Section 3 of the Broadcasting Act to intervene in the sector with new funds, competition decisions, or other economic matters. “Certainly there is a reason for people to take a hard look at some of the economic regulation the commission has engaged in under the Broadcasting Act and ask, 'Is this actually valid?'” one industry person familiar with the decision said. The people said the CRTC's distant signal regime, which requires broadcast distributors to obtain consent of local broadcasters before carrying their signals in non-local markets, is almost certain to be challenged in court and is likely to be struck down. They added that other CRTC broadcasting policies—such as funds like the winding-down Local Programming Improvement Fund (LPIF), the CRTC's tangible benefits policy as applied to broadcasting transactions, simultaneous substitution regulations, or the regulator's intervention in competition issues through its code of conduct in a multi-platform, vertically integrated broadcasting industry—could now be interpreted as outside its jurisdiction. “There's a lot in that decision, if people want to start taking a run at some of those ,” one person said. Another person said the Supreme Court decision is expected to be raised in broadcasting proceedings, particularly as the commission reviews policies as identified in its three-year plan released in September. Those include a review of genre protections for specialty channels and how to streamline its tangible benefits policy, which traditionally requires companies acquiring TV broadcast assets to dedicate about 10 per cent of their value towards projects benefiting the Canadian broadcasting system. Another industry person disagreed that the court decision is likely to affect the CRTC's tangible benefits policy, though they confirmed that companies are drawing up lists of regulations potentially outside the law. “It's going to be really interesting to see how this plays out over the next six to 18 months,” the person said. The policy objectives in Section 3 of the Broadcasting Act outline broad goals for the broadcasting system to “enrich and strengthen the cultural, political, social and economic fabric of Canada,” encourage Canadian expression and aspirations, and air local, regional, and national Canadian programming throughout Canada. The decision will push the commission, when measuring its legal authority to introduce regulations, to now prioritize sections nine and 10 of the Broadcasting Act, the people said, which more precisely delineate powers such as awarding or revoking broadcasting licences, implementing Canadian programming requirements, and issuing orders for mandatory distribution or the “must offer” carriage of specialty channels under Section 9(1)(h). “They've got to be very careful to stay within their jurisdiction. This is probably going to be the leading case in Canada on what the CRTC can or can't do,” another person said, referring to the commission's powers under the Broadcasting Act. The sources pointed to paragraph 25 of the court decision, which said general policy statements are intended to “circumscribe the discretion granted to a subordinate legislative body,” not expand it. The court said a 1979 Supreme Court ruling, CKOY Ltd. v. The Queen, does not establish that the policy objectives in Section 3 of the act serve as a basis for the CRTC to propose regulations, contrary to the broadcasters' arguments. The sources also referred to paragraphs 22 and 23 of the decision, which said the Section 3 policy objectives are “not jurisdiction-conferring provisions” and that such “declarations of policy cannot serve to extend the powers of the subordinate body to spheres not granted by Parliament in jurisdiction-conferring provisions.” The Supreme Court effectively said, “Back up a second, you've been doing it backwards,” one person said. “Sections nine and 10 were kind of an afterthought before, and now, I think the court, the majority decision, is saying that you start with sections nine and 10. Then you look back to Section 3.” Any limitations on the CRTC's powers resulting from the decision would only apply to the broadcasting sector and not to telecom. One person said they hope the decision will encourage the CRTC to work with companies and stakeholders on regulatory reform. The CRTC declined to comment. A commission official said the regulator is reviewing the Supreme Court decision. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Nicholas Kyonka at nkyonka@thewirereport.ca news@thewirereport.ca

Court challenges of CRTC regs expected following Supreme Court decision

News | December 20, 2012

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Court challenges of CRTC regs expected following Supreme Court decision

News | December 20, 2012

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