US budget office rejects FCC's cable leasing rules

WASHINGTON, July 10 (Reuters) - White House budget officials rejected a rule passed by regulators last year that would force cable operators to cut the price they charge to lease channels to independent programmers, an industry group said on Thursday.

The White House Office of Management and Budget rejected new "leased access" rules adopted in November by the Federal Communications Commission and opposed by cable operators. The OMB said the FCC had failed to justify the additional bureaucratic burdens they would put on cable companies.

The rules -- which had been put on hold by a federal appeals court in Cincinnati in May after cable operators filed a lawsuit challenging them -- had not yet gone into effect.

The FCC could still override the OMB decision if a majority of the five commissioners votes to do so. An FCC official said on Thursday that no decision had been made yet about what to do next.

OMB's decision was applauded by the trade group that represents small U.S. cable operators, the American Cable Association. It had criticized the new rules as overly burdensome.

"This order ran contrary to the FCC's continued efforts to reduce small business reporting burdens, and the OMB was right to reject it," American Cable Association president Matthew Polka said in a statement.

The rules also had been opposed by larger U.S. cable operators, including Comcast Corp (CMCSA.O). (Editing by Gary Hill)