Radio v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 13, 2001 Decided February 8, 2002

No. 99-1463

Grid Radio and

Jerry Szoka,

Appellants

v.

Federal Communications Commission,

Appellee

National Association of Broadcasters,

Intervenor

Consolidated with

99-1527

Appeal from and Petition for Review of an Order of the

Federal Communications Commission

Hans F. Bader argued the cause for appellants/petitioners.

With him on the briefs was Michael E. Rosman. Michael P.

McDonald entered an appearance.

Rodger D. Citron, Counsel, Federal Communications Com-

mission, argued the cause for appellees/respondents. With

him on the brief were Jane E. Mago, General Counsel,

Daniel M. Armstrong, Associate General Counsel, Jacob M.

Lewis and Mark Davies, Attorneys, U.S. Department of

Justice. David Silberman, Counsel, Federal Communica-

tions Commission, entered an appearance.

Henry L. Baumann and Jack N. Goodman were on the

brief for intervenor National Association of Broadcasters.

Before: Tatel and Garland, Circuit Judges, and Williams,

Senior Circuit Judge.*

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: An unlicensed operator of a low-

power FM radio station challenges a Federal Communica-

tions Commission order directing him to cease broadcasting.

He contends the order and an ancillary $11,000 forfeiture are

unenforceable because the Commission's ban on low-power

FM stations, in place until January 2000, contravened the

Communications Act of 1934 and the First Amendment, and

because the forfeiture is unreasonable, excessive, and beyond

his ability to pay. We reject these claims and affirm. Ab-

sent a demonstration that the low-power ban was indisputably

unlawful or unconstitutional, the Commission had no obli-

gation to reconsider the ban in the context of an enforcement

proceeding against a single unlicensed operator. Moreover,

the forfeiture is reasonable under the circumstances of this

case, and the operator waived his inability-to-pay claim.

I.

Section 301 of the Communications Act of 1934 makes it

unlawful to operate a radio station without a license from the

__________

* Senior Circuit Judge Williams was in regular active service at

the time of oral argument.

Federal Communications Commission. 47 U.S.C. s 301.

Historically, the Commission's elaborate licensing scheme

included four classes of licenses--A, B, C, and D--distin-

guished on the basis of such factors as station location,

antenna height, and transmission power. Until 1978, the

Commission allocated Class D licenses to "microbroadcast

stations," so called because they operate at power levels of

less than one hundred watts and reach listeners within a two-

to twelve-mile radius of the point of transmission. In 1978,

however, choosing to "str[ike] the balance in favor of licensing

higher-powered stations to ensure that large audiences were

served," the Commission adopted a "microbroadcasting ban"

pursuant to which it stopped awarding Class D licenses.

Creation of a Low Power Radio Serv., 15 F.C.C. Rcd. 19,208,

19,236 (2000) (reconsideration) (discussing Changes in the

Rules Relating to Noncommercial Educ. FM Broad. Stations,

70 F.C.C.2d 972, 983 (1978) (codified at 47 C.F.R.

s 73.512(d))).

At all times relevant to this case, appellant Jerry Szoka

knew of both the licensing requirement and the microbroad-

casting ban. Yet from 1995 until mid-2000, Szoka operated

Grid Radio, an unlicensed low-power station in Cleveland,

Ohio. He never applied for a license because he believed

applying would be futile given the microbroadcasting ban.

In early 1997, after receiving a complaint about Grid Radio,

the Commission sent Szoka two successive letters warning

him that if he continued to operate the station, he could face

fines, forfeitures, or criminal sanctions. Responding to the

first letter, Szoka urged the Commission to "ignore" his

unlicensed operations because Grid Radio "is top quality,

provides a much needed community service without commer-

cials, and [does not] interfer[e] with other stations." Jerry

Szoka, 13 F.C.C. Rcd. 10,630, 10,630-31 (1998) (order to show

cause). Nothing in the record indicates whether Szoka re-

sponded to the second letter.

Despite the Commission's letters, Szoka continued operat-

ing Grid Radio. Id. at 10,631. In response, the Commission

issued an order directing Szoka to show cause why he should

not be ordered to cease and desist from violating section 301.

The show-cause order specified two issues for consideration

at an upcoming hearing: whether Szoka was "transmitt[ing]

radio energy without appropriate authorization," and if so,

whether he "should be ordered to cease and desist" from that

activity. Jerry Szoka, FCC 98D-3, 1998 FCC LEXIS 4563,

*1 (1998) (ALJ summary decision). The order also indicated

that the Commission was considering "whether ... Szoka

should forfeit $11,000"--the maximum daily penalty (adjusted

for inflation) for a continuing violation of the Act. Id. at *1,

*8 (citing 47 U.S.C. s 503(b)(2)(C)); see also 47 C.F.R.

s 1.80(b)(5) (detailing how to adjust forfeitures for inflation).

The Chief of the Commission's Compliance and Information

Bureau moved for summary decision of the issues identified

in the show-cause order. Although Szoka conceded he had no

license to operate Grid Radio, he objected to the summary

judgment motion, arguing he had no obligation to comply

with Commission licensing rules because the microbroadcast-

ing ban was both unlawful and unconstitutional. He also

challenged the forfeiture as unreasonable and excessive in

violation of the Fifth and Eighth Amendments to the United

States Constitution.

In light of Szoka's concession that he lacked a license to

operate Grid Radio, the Administrative Law Judge concluded

that no substantial issues of material fact remained, granted

the Commission's motion for summary decision, issued a

cease-and-desist order, and imposed the forfeiture. Jerry

Szoka, 1998 FCC LEXIS 4563, at *3-4. In so doing, the ALJ

rejected Szoka's constitutional challenges to the microbroad-

casting ban on two alternative grounds: on the merits be-

cause the "right of free speech does not include the right to

use radio facilities without a license"; and for lack of standing

because Szoka failed to apply for either a license or a waiver

of the microbroadcasting ban. Id. at *6-8 (citing NBC v.

United States, 319 U.S. 190, 227 (1943); United States v.

Dunifer, 997 F. Supp. 1235, 1241 (N.D. Cal. 1998); Stephen

Paul Dunifer, 11 F.C.C. Rcd. 718, 727 (1995)). Rejecting

Szoka's Fifth and Eighth Amendment claims, the ALJ found

that "imposition of a forfeiture is civil and not a criminal

penalty," and that "the statutory scheme authorizing the

[Commission] to enforce forfeitures ... contains appropriate

safeguards which satisfy due process requirements...." Id.

at *9-10.

The Commission affirmed the ALJ's order, finding Szoka

without standing to challenge the licensing regulations and

rejecting his constitutional challenges to the microbroadcast-

ing ban and forfeiture. Jerry Szoka, 14 F.C.C. Rcd. 9857,

9857 (1999). The Commission informed Szoka that he could

file a claim of inability to pay the forfeiture by submitting tax

returns or other financial statements covering the previous

three years. Id. at 9867.

Szoka filed petitions for reconsideration and for a stay of

the orders against him, claiming, among other things, that he

was unable to pay the forfeiture. In support, Szoka submit-

ted a financial statement and tax returns for 1996 through

1998 showing $8,500 in assets and an annual adjusted gross

income averaging about $12,000. Jerry Szoka, 14 F.C.C. Rcd.

20,147, 20,150 (1999) (reconsideration). The Commission de-

nied Szoka's petitions for reconsideration and for a stay, and

also rejected without a hearing his claim of inability to pay,

finding that although Szoka's "stated assets and income do

not appear to be large," he failed to "submit[ ] sufficient

objective evidence and supporting information to sustain his

claim that they are so inadequate as to render him unable to

pay a forfeiture." Id. The Commission pointed out that

although its Compliance and Information Bureau had invited

Szoka to file further documentation in support of his financial

claims, he failed to do so. Id. at 20,150 n.2.

Following the Commission's rejection of Szoka's motion for

reconsideration and for a stay, the cease-and-desist order

became effective. Because Szoka continued to operate Grid

Radio, the Commission filed suit in the United States District

Court for the Northern District of Ohio to compel compliance.

See 47 U.S.C. s 401(b) (authorizing Commission to "apply to

the appropriate district court of the United States for the

enforcement of [most orders of the Commission]"). Finding

the cease-and-desist order "regularly made and duly served,"

the district court ordered Szoka to stop broadcasting by

March 1, 2000. United States v. Szoka, 260 F.3d 516, 523

(6th Cir. 2001) (citing district court's affirmance of the Com-

mission's cease-and-desist order against Szoka) (internal quo-

tation marks omitted). The Sixth Circuit affirmed, declining

to reach Szoka's constitutional challenge to the microbroad-

casting ban because in its view, the D.C. Circuit has exclusive

jurisdiction to "nullify a cease-and-desist order based on

unconstitutional regulations promulgated by the [Commis-

sion]." Id. at 528.

In the meantime, Szoka filed this appeal of the cease-and-

desist order and forfeiture. He alleges that: (1) prior to

issuing the cease-and-desist order, the Commission was obli-

gated to demonstrate that shutting down Grid Radio would

further the public interest; (2) the now-defunct microbroad-

casting ban contravened the Act's requirement that the Com-

mission regulate "in the public interest," 47 U.S.C. s 303(g);

(3) the ban violated the First Amendment; (4) the forfeiture

constitutes an "excessive fine[ ]" in violation of the Eighth

Amendment; and finally, (5) the forfeiture is not the product

of reasoned decision-making and should be reduced in light of

Szoka's financial hardship. Although the Commission recent-

ly abandoned its microbroadcasting ban and adopted new

rules authorizing the licensing of low-power stations, see

Ruggiero v. FCC, No. 00-1100, slip. op. at 3-5, __ F.3d __

(D.C. Cir. Feb. 8, 2002), Szoka has not applied for a license

under the new regime, nor does he challenge that regime

here.

II.

The Commission argues that because Szoka failed to apply

for a license or to seek a waiver of the microbroadcasting ban,

he lacks standing to raise his constitutional and statutory

challenges. Since this argument implicates our jurisdiction,

we consider it first.

The Commission's standing argument rests on its assertion

that Szoka could have challenged the microbroadcasting ban

without operating illegally--and therefore without subjecting

himself to the cease-and-desist order or incurring the forfei-

ture. For example, the Commission points out that had

Szoka applied for a waiver and the Commission denied his

application, he could have appealed to this court and raised

his constitutional and statutory challenges to the microbroad-

casting ban at that time. 47 U.S.C. s 402(b)(1). Further, if

Szoka had requested a waiver and the Commission dragged

its feet in responding to the request, Szoka could have

petitioned this court for a writ of mandamus to compel

Commission action. See Telecomm. Research & Action v.

FCC, 750 F.2d 70, 79 (D.C. Cir. 1984) (discussing this court's

jurisdiction to hear claims of unreasonable agency delay).

Given the number of lawful avenues available to him to

challenge the microbroadcasting ban, the Commission argues,

Szoka cannot now claim that his unlawful broadcasts were

necessary to obtain judicial review of the ban. Thus, Szoka's

injury is traceable not to the ban but to the more general

prohibition against operating without a license, which Szoka

does not challenge here. Accordingly, the Commission con-

tends, Szoka has failed to demonstrate one of the prerequi-

sites to Article III standing: a personal injury fairly tracea-

ble to the challenged Commission action. Lujan v. Defenders

of Wildlife, 504 U.S. 555, 560 (1992).

We are unpersuaded. To begin with, the cease-and-desist

order and forfeiture are, as Szoka argues, present injuries,

both of which are fairly, if circuitously, traceable to the

Commission's microbroadcasting ban. The record before us

is clear: But for the ban, Szoka would have applied for a

license, and the Commission points to no individual character-

istics--of either Szoka or Grid Radio--that would have led it

categorically to deny his application in the absence of the ban.

Moreover, we agree with Szoka that applying for a waiver

would have been futile. See Prayze FM v. FCC, 214 F.3d

245, 251 (2nd Cir. 2000) (noting that although a plaintiff must

generally submit to a policy "to establish standing to chal-

lenge" its constitutionality, "[t]his threshold requirement ...

may be excused ... where a plaintiff makes a substantial

showing that application for the benefit ... would have been

futile"); Ellison v. Connor, 153 F.3d 247, 255 (5th Cir. 1998)

(same); cf. DKT Mem'l Fund, Ltd. v. Agency for Int'l Dev.,

810 F.2d 1236, 1238 (D.C. Cir. 1987) (noting that "otherwise

qualified non-applicants may have standing to challenge a

disqualifying statute or regulation"). The Commission cites

only two instances in the last two decades in which it granted

a waiver to the microbroadcasting ban--once to an Indian

village in Alaska, where the microbroadcasting ban does not

apply, and once to a remote community in a Navajo-speaking

area of New Mexico, where high-power, English broadcasts

are of little relevance. Turro v. FCC, 859 F.2d 1498, 1500 n.1

(D.C. Cir. 1988) (noting these two instances). Neither of

these waivers suggests that the Commission would seriously

consider granting a waiver for Szoka to broadcast in English

in Cleveland, Ohio. Finally, we agree with Szoka that be-

cause the Constitution permits a person faced with an uncon-

stitutional licensing law to "ignore it and engage with impuni-

ty in the exercise of the right of free expression for which the

law purports to require a license," the illegality of his unli-

censed operations cannot, as the Commission implies, entirely

preclude him from raising his constitutional claims. Shuttles-

worth v. City of Birmingham, 394 U.S. 147, 151 (1969).

III.

Turning to the merits, we begin with Szoka's argument that

under the Communications Act the Commission should have

considered whether shutting down Grid Radio would further

the public interest. According to Szoka, his station served a

"niche audience" "not adequately serv[ed]" by full-power FM

stations: "gay men and women and the arts community."

Appellants' Br. at 11. Valuable as Grid Radio's broadcasts

may have been, we think it clear that the Commission had no

obligation to consider the station's individual circumstances

before shutting it down. At the time this controversy began,

the Commission had determined that the public interest was

best served by uniformly denying licenses to low-power sta-

tions to promote "the establishment of more efficient, stable,

full powered stations." Creation of a Low Power Radio Serv.,

15 F.C.C. Rcd. at 19,236 n.93 (internal citations omitted).

Although Szoka strenuously disagrees with that determina-

tion, the Commission need not reevaluate well-worn policy

arguments each time it implements an existing rule in a

narrow adjudicatory proceeding against an acknowledged

rule-breaker. Turro, 859 F.2d at 1500. To hold otherwise

would obligate the Commission to "examine an entire range

of policy questions that are not unique to [Szoka] and are

more appropriately considered in a rulemaking proceeding."

Id.

Nothing in C.J. Community Services v. FCC, 246 F.2d 660

(D.C. Cir. 1957), requires a different result. Although we

concluded there that the Commission could not shut down an

unlicensed, low-power television booster station without con-

sidering whether "public interest, convenience, and necessity

would be served," our concern related to the Commission's

failure to consider or establish any licensing procedure for

booster installations. Id. at 662 (complaining that the Com-

mission had "not made it possible, after all these years, for

the issuance of a license to a booster installation, such as is

here disclosed"). This case is very different. Here, the

Commission long ago established a licensing regime for

broadcast stations and expressly decided not to issue licenses

to low-power stations because of the risk of interference to

higher-power stations. Creation of a Low Power Radio Serv.,

15 F.C.C. Rcd. at 19,236 n.93. That decision would have no

import if the Commission had an independent obligation to

consider on a case-by-case basis the pros and cons of shutting

down each individual, unlicensed microradio operation.

Where, as here, the Commission has evaluated the public

interest in a rulemaking, it would be absurdly inefficient--and

would invite confusion--to require it to perform the same

evaluation each time it enforces the resulting rule.

Szoka's broader claims--that the microbroadcasting ban

itself was unlawful and unconstitutional, facially and as-

applied to him--present a harder question, for we generally

permit "a party against whom a rule is [enforced] ... [to]

pursue substantive objections to the rule" at the time of

enforcement. Indep. Cmty. Bankers of Am. v. Bd. of Gover-

nors of the Fed. Reserve Sys., 195 F.3d 28, 34 (D.C. Cir.

1999). Permitting Szoka or anyone else to operate without a

license as a means of challenging the microbroadcasting ban,

however, could produce the very "chaos" that, according to

the Supreme Court, the broadcast licensing regime was de-

signed to prevent. Red Lion Broad. Co. v. FCC, 395 U.S.

367, 375-76 (1969). Moreover, we have no concern here that

"limiting the right of review of the ... rule would effectively

deny [Szoka] ... an opportunity to question its validity."

Functional Music, Inc. v. FCC, 274 F.2d 543, 546 (D.C. Cir.

1958). Szoka could have petitioned for a rulemaking or

applied for a waiver and, if the Commission denied his

request, challenged that denial in the appropriate circuit

court. See supra p. 7; 28 U.S.C. s 2342(1); 47 U.S.C.

s 402(a), (b)(1). That he did neither, choosing instead to

operate without a license, makes it inappropriate for us to

consider his challenge to the microbroadcasting ban absent

"an undisputable indication ..., either because of the reason-

ing of a Supreme Court decision or intervening legislation,"

that the microbroadcasting ban was unlawful or unconstitu-

tional. Tribune Co. v. FCC, 133 F.3d 61, 68 (D.C. Cir. 1998)

(applying a similarly narrow scope of review in a case involv-

ing an application for a waiver of certain broadcasting restric-

tions). Had Szoka provided such an indication, we would

invalidate the cease-and-desist order and forfeiture. But

none of his challenges to the microbroadcasting ban clears

this high bar.

Szoka first argues that the microbroadcasting ban conflicts

with the Commission's "affirmative mandate to maximize use

of the spectrum resource." Appellants' Br. at 48. Yet the

Commission resolved just this issue in its 1978 rulemaking

when it concluded that licensing low-power stations would

interfere with the propagation of higher-power stations. Be-

cause Szoka offers nothing to suggest that the 1978 policy

was indisputably unlawful, we decline now to consider his

challenge to it.

Recasting his public-interest argument as a challenge to

the ban itself, Szoka next claims that under the Act, the

Commission must be "flexible and responsive in applying its

[microbroadcasting] rule[ ], so that the public interest in a

particular case is not undermined by a rigid adherence to

preestablished rules and regulations." Id. at 49. Turro also

answers this claim: "Strict adherence to a general rule may

be justified by the gain in certainty and administrative ease."

859 F.2d at 1500. Again, therefore, absent evidence that the

microbroadcasting ban was indisputably unlawful, the Com-

mission was entitled to adhere to it.

We reach a similar conclusion regarding Szoka's facial and

as-applied constitutional claims. According to Szoka, to sur-

vive First Amendment scrutiny, "the ban must have been at

least a narrowly tailored method of achieving a substantial

governmental interest." Appellants' Br. at 35 (citing FCC v.

League of Women Voters, 468 U.S. 364, 380 (1984)). Under

this intermediate scrutiny standard, he argues, the Commis-

sion "had an obligation to revisit the viability of microradio in

light of rapid technological changes since [the ban was

adopted in] 1978." Appellants' Br. at 37. That the Commis-

sion only began to reconsider its microbroadcasting ban in

1999, he implies, indicates that the ban was not narrowly

tailored to the interest it served. Moreover, he claims that

the original interest served by the ban--the need to promote

stable, higher-power stations to ensure efficient use of scarce

spectrum--is no longer substantial given advances in broad-

cast technology.

We need not decide whether intermediate scrutiny is the

appropriate standard of review, see, e.g., News America

Publ'g Inc. v. FCC, 844 F.2d 800, 814 (D.C. Cir. 1988)

(discussing the appropriate level of scrutiny to apply to a

statute restricting broadcast speech), as we see two simpler

responses to Szoka's arguments. First, although the Su-

preme Court has "obliquely suggested it might [one day]

reconsider" the scarcity doctrine on which the microbroad-

casting ban rests, judicial ambivalence falls far short of a

"clear manifestation that [a] rule ... is [facially] illegal."

Tribune, 133 F.3d at 68 (discussing League of Women Voters,

468 U.S. at 376-77 n.11). 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 to any other unlicensed micro-

broadcaster. Absent clear congressional or judicial signals

that the microbroadcasting ban was unlawful, or unequivocal

evidence that Grid Radio's circumstances warranted differen-

tial application of the ban, we think the Commission could

continue to enforce the ban and the chaos-averting licensing

regime.

IV.

This brings us to Szoka's challenge to the $11,000 forfei-

ture. Decrying this sum as "grossly disproportionate to the

gravity of the offense," Szoka first argues that the forfeiture

violates the Eighth Amendment's Excessive Fines Clause.

Appellants' Br. at 50. We disagree. In the case on which

Szoka relies, United States v. Bajakajian, the government

imposed a fine of over $350,000 for failure to report the

export of currency. 524 U.S. 321, 324 (1998). Declaring that

forfeiture unconstitutional, the Court was primarily concerned

that the potential penalty for illegal export of currency would

be indefinite and unlimited--and disproportionate to the of-

fense--if the government could seize whatever amount of

currency the unwitting "exporter" happened to be carrying

when caught. Id. at 334-40. No such problem exists here.

The $11,000 represents the statutory penalty (adjusted for

inflation) for unlicensed operation of a radio station, or for

each day of a continuing violation. 47 U.S.C. s 503(b)(2)(C);

47 C.F.R. s 1.80(b)(4)-(5). The amount is neither indefinite

nor unlimited, nor does it seem excessive in view of Szoka's

continued and willful violation of the licensing requirement.

Szoka next argues that the forfeiture is "[n]ot the [p]roduct

of [r]easoned [d]ecisionmaking." Appellants' Br. at 52. As in

any arbitrary-and-capricious challenge, we "presume the va-

lidity" of the agency's action, Kisser v. Cisneros, 14 F.3d 615,

618 (D.C. Cir. 1994)--a presumption Szoka can overcome only

by demonstrating that the forfeiture constitutes a "clear error

of judgment," Citizens to Preserve Overton Park v. Volpe, 401

U.S. 402, 416 (1971), overruled on other grounds by Califano

v. Sanders, 430 U.S. 99, 105 (1977). Nothing in either the

record or Szoka's briefs convinces us that the Commission's

decision to impose the maximum one-day penalty was clearly

erroneous: Szoka intentionally operated a radio station with-

out a license for over five years, continued to operate the

station after receiving two Commission warning letters, and

even refused to shut down after the Commission imposed the

cease-and-desist order and forfeiture. In light of Szoka's

"deliberate and willful" violation of section 301, the penalty

seems entirely reasonable. 47 U.S.C. s 503(b)(2)(D) (indicat-

ing that in determining the amount of a forfeiture, the

Commission "shall take into account," among other things,

"the extent[ ] and gravity of the violation and, with respect to

the violator, the degree of culpability[ and] any history of

prior offenses").

Finally, in support of his argument that the Commission

should have reduced the fine because he demonstrated his

"inability to pay," Szoka points to three years of tax returns

showing adjusted gross income below the poverty line. Ap-

pellants' Br. at 58. He also argues that his three capital

assets--radio equipment, a 37% interest in a nightclub lease,

and a 1/12th interest in a commercial building--are illiquid

and unavailable to pay the forfeiture. When Szoka presented

this evidence to the Commission, however, the agency noted

certain "apparent contradictions" and concluded the evidence

was "not ... sufficient to justify reduction of the proposed

forfeiture." Jerry Szoka, 14 F.C.C. Rcd. at 20,150. More-

over, the Commission indicated that although its Compliance

and Information Bureau had invited Szoka to supplement his

financial information, he declined to do so. Id. at 20,150 n.2.

Indeed, Szoka's counsel confirmed at oral argument that

Szoka neither submitted the requested supplemental informa-

tion nor requested a hearing at which to address the contra-

dictions. We therefore find Szoka's inability-to-pay claim

waived.

V.

The decision of the Federal Communications Commission is

affirmed.

So ordered.