D.  Court Sends Mixed Signals

in Low Power FM Cases

 

      Two federal court decisions issued on Feb. 8, 2002 had vastly different effects on potential licensees of the new Low Power FM radio service (LPFM) currently being allocated by the Federal Communications Commission.  In Grid Radio v. FCC, 278 F.3d 1314 (D.C. Cir. 2002), the U.S. Court of Appeals for the District of Columbia Circuit upheld an order directing an unlicensed “pirate” radio operator to cease broadcasting immediately and pay an $11,000 fine for his transgressions.  But the same court, in Ruggiero v. FCC, 278 F.3d 1323 (D.C. Cir. 2002), threw out a Commission regulation prohibiting another pirate operator from obtaining an LPFM operating license.

 

Grid Radio Loses Battle

      Section 301 of the Communications Act of 1934 prohibits the operation of a radio station without a license from the FCC.  Yet, from 1995 to 2000, Jerry Szoka operated “Grid Radio,” an unlicensed low power radio station in Cleveland.  In 1997, Mr. Szoka received two letters from the FCC warning him that he would face fines, forfeitures, or criminal sanctions if he continued to operate his station.  He ignored these letters and continued to broadcast.  The Commission then issued an order directing Mr. Szoka to demonstrate why he should not be ordered to cease and desist from violating the Commission’s prohibition on unlicensed broadcasting.  Mr. Szoka again failed to reply. 

      At this point, the chief of the Commission’s Compliance and Information Bureau moved for summary decision of the issues specified against Mr. Szoka.  Mr. Szoka finally raised an objection, arguing he had no obligation to comply with Commission licensing rules because the ban found in Section 301 was both unlawful and unconstitutional.  He also argued that his fine amounted to an excessive forfeiture in violation of the Fifth and Eighth amendments to the U.S. Constitution. 

      An administrative law judge (ALJ) brushed aside Mr. Szoka’s defense and granted the Commission’s motion for summary decision.  Jerry Szoka, 1998 FCC LEXIS 4563 (rel. Sept. 4, 1998).  The ALJ held that: (1) the right to free speech does not include the right to broadcast without a license; and (2) the imposition of a forfeiture is a civil, not a criminal, penalty for which the Commission has instituted proper procedural safeguards.  Id.  The full Commission affirmed this decision.  Jerry Szoka, 14 FCC Rcd. 9857 (1999).  Mr. Szoka filed petitions for reconsideration and for a stay of the orders against him, which were also denied.  Jerry Szoka, 14 FCC Rcd. 20147 (1999). 

      When Mr. Szoka continued to operate Grid Radio, the Commission filed suit in the U.S. District Court for the Northern District of Ohio, seeking to compel compliance with the Commission’s order.  The district court ordered Mr. Szoka to stop broadcasting, in an oral decision eventually affirmed by the U.S. Court of Appeals for the Sixth Circuit.  United States v. Szoka, 260 F.3d 516, 523 (6th Cir. 2001). 

      At the same time, Mr. Szoka filed an appeal of the cease-and-desist order and forfeiture in the U.S. Court of Appeals for the District of Columbia Circuit.  He alleged that: (1) the Commission was obligated to demonstrate that shutting down Grid Radio was in the public interest; (2) the ban on unlicensed broadcasting contravened the requirement that the Commission act in the public interest; (3) the ban violated the First Amendment; (4) the forfeiture constituted an excessive fine in violation of the Eighth Amendment; and (5) the forfeiture was not the product of reasoned decisionmaking and should be reduced in light of Mr. Szoka’s financial hardship.

      The court of appeals first held that Mr. Szoka had standing to bring this challenge, even though Mr. Szoka had not challenged the ban on unlicensed broadcasting at the Commission level and instead continued to operate illegally.  The court held that Mr. Szoka had obviously been harmed by the Commission’s decision and was under no obligation to choose between cessation of broadcasting and bringing a legal challenge.  Grid Radio, 278 F.3d at 1320. 

      Turning to the merits of the case, the appeals court held that the Commission had no obligation to review the individual circumstances of Grid Radio, or its contribution to the “public interest,” before shutting the station down.  The Commission had already determined, via a rulemaking proceeding, that this sort of low power niche broadcasting was better accomplished through the creation of an organized LPFM allocation system.  It would be patently absurd to force the Commission to engage in that same analysis every time it sought to shut down a low power scofflaw. 

       Mr. Szoka urged that the court of appeals apply an intermediate level of scrutiny when determining whether the ban on unlicensed broadcasting violated the First Amendment.  However, the court noted that it did not need to analyze the ban under any test; it simply knew the ban was constitutional because the authority of the Commission to maintain the sanctity and order of the airwaves had repeatedly been upheld:

 

First, although the Supreme Court has “obliquely suggested it might [one day] reconsider” the scarcity doctrine on which the microbroadcasting ban rests, judicial ambivalence falls far short of a “clear manifestation that [a] rule … is [facially] illegal.”  Second, Szoka offers no evidence to suggest that his circumstances were so unique as to impose on the Commission a constitutional obligation to apply the ban differently to him than any other unlicensed microbroadcaster.  Absent clear congressional or judicial signals that the microbroadcasting ban was unlawful, or unequivocal evidence that Grid Radio’s circumstances warranted differential application of the ban, we think that the Commission could continue to enforce the ban and the chaos-averting licensing scheme.  Grid Radio, 278 F.3d at 1322 (citing Tribune Co. v. FCC, 133 F.3d 61, 68 (D.C. Cir. 1998)).

 

      Finally, the $11,000 fine was not unconstitutional, as it was not grossly disproportionate to the gravity of the offense.  The court of appeals found it was simply an application of the statutory penalty for unlicensed operation of a radio station.  It is neither indefinite nor unlimited, nor excessive in view of Mr. Szoka’s continued and willful violation of the licensing requirement.  Mr. Szoka’s inability to pay was of no importance to the court, which held that he had, in effect, waived that claim by not accepting the Commission’s invitation to provide financial information when the case was at the administrative stage.

 

Ruggiero Fares Better 

      The news for another former pirate operator was much better on Feb. 8, 2002, however.  Greg Ruggiero had been denied an LPFM license based upon a provision of the Radio Broadcasting Preservation Act of 2000 (RBPA).  This statute was enacted in response to the Commission’s passage of an LPFM licensing scheme that Congress believed would cause too much interference with full power broadcasting.  In addition to reducing the overall number of LPFM licenses that could be awarded throughout the nation and in any given market, Congress inserted a provision into the RBPA that instructed the Commission to deny licenses to all applicants whose officers or board members ever operated any manner of unlicensed station. 

      Mr. Ruggiero challenged this provision before the U.S. Court of Appeals for the District of Columbia Circuit.  He argued that it violated the First and Fifth amendments to the U.S. Constitution.

      In this case, the appeals court was forced to determine the appropriate level of First Amendment scrutiny – even though the parties had agreed that the Supreme Court’s decision in Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969), necessitated more lenient scrutiny of broadcast regulations.  The court of appeals, however, did not equate “lenient” with “nonexistent” as the FCC would have liked.  It stated that relevant precedent did not mean that all reasonable broadcasting restrictions would pass constitutional muster.  Only those that were content neutral and preserved the interest of the people as a whole in free speech would be upheld.  Ruggiero, 278 F.3d at 1329. 

      This character provision is not purely content based, nor does it ban a form of speech that lies at the heart of First Amendment protection, but it does have rather important speech implications:  No person who ever engaged in unlicensed broadcasting may operate an LPFM station.  For this reason, the provision raised some constitutional questions, much like those raised in News America Publishing, Inc. v. FCC, 844 F.2d 800 (D.C. Cir. 2000).  In that case, the court of appeals had rejected application of the permissive “rational basis” standard to a regulation that effectively singled out Rupert Murdoch and prevented him from operating television stations in certain markets. 

      However, as in Grid Radio, the actual standard to be applied would have little effect, as the court found that application of any standard that was appreciably more stringent than “minimum rationality” required invalidation of the challenged provision.  Ruggiero, 278 F.3d at 1331.  Accepting as valid Congress’s twin goals of (1) deterring future operation of unlicensed stations, and (2) preventing former pirates from obtaining licenses, the appeals court held that the RBPA’s character qualification provision bore only “the most strained relationship to its ostensible purpose.”  Id. 

      The court found the provision “astonishingly underinclusive” because it banned only those who engaged in unlicensed operation from obtaining an LPFM license, while allowing others of questionable character, including civil wrongdoers, felons, and other regulatory violators, to obtain such a license.  Id.  Further, the Commission is not prohibited from granting full-power licenses to former unlicensed broadcasters; this double standard was never explained.  Finally, the RBPA provides no opportunity for the rehabilitated to prove their worth, instead branding a former pirate an outlaw for all time. 

      The court of appeals vacated the Commission’s decision denying Ruggiero a license and remanded the case back to the Commission.  The court noted that nothing prevented the Commission from creating a licensing regulation that prohibits some former pirates from obtaining LPFM licenses, as long as there is some basis for doing so.

 

--Kevin Goldberg and Richard M. Schmidt, Jr.