Grid Radio v. F.C.C.

• Decision Date: 08 February 2002
• Docket Number: No. 99-1463.,No. 99-1527.,99-1463.,99-1527.
• Citation: 278 F.3d 1314
• Parties: GRID RADIO and Jerry Szoka, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. National Association of Broadcasters, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

278 F.3d 1314

GRID RADIO and Jerry Szoka, Appellants, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.

National Association of Broadcasters, Intervenor.

No. 99-1463.

No. 99-1527.

United States Court of Appeals, District of Columbia Circuit.

Argued September 13, 2001.

Decided February 8, 2002.

COPYRIGHT MATERIAL OMITTED

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 Commission, 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 Communications 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 Communications 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. Absent a demonstration that the low-power ban was indisputably unlawful or unconstitutional, the Commission had no obligation 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 Federal Communications Commission. 47 U.S.C. § 301. Historically, the Commission's elaborate licensing scheme included four classes of licenses — A, B, C, and D — distinguished 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 WL 1434686 (2000) (reconsideration) (discussing Changes in the Rules Relating to Noncommercial Educ. FM Broad. Stations, 70 F.C.C.2d 972, 983, 1979 WL 44256 (1979) (codified at 47 C.F.R. § 73.512(d))).

At all times relevant to this case, appellant Jerry Szoka knew of both the licensing requirement and the microbroadcasting 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 commercials, and [does not] interfer[e] with other stations." Jerry Szoka, 13 F.C.C. Rcd. 10,630, 10,630-31, 1998 WL 153227 (1998) (order to show cause). Nothing in the record indicates whether Szoka responded to the second letter.

Despite the Commission's letters, Szoka continued operating 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 WL 559385 (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. § 503(b)(2)(C)); see also 47 C.F.R. § 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 microbroadcasting 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 microbroadcasting ban on two alternative grounds: on the merits because 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, 63 S.Ct. 997, 87 L.Ed. 1344 (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 WL 457843 (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 microbroadcasting ban and forfeiture. Jerry Szoka, 14 F.C.C. Rcd. 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 submitted 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 WL 867680 (1999) (reconsideration). The Commission denied 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. § 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 Commission's cease-and-desist order against Szoka) (internal quotation marks omitted). The Sixth Circuit affirmed, declining to reach Szoka's constitutional challenge to the microbroadcasting 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 [Commission]." 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 obligated to demonstrate that shutting down Grid Radio would further the public interest; (2) the now-defunct microbroadcasting ban contravened the Act's requirement that the Commission regulate "in the public interest," 47 U.S.C. § 303(g); (3) the ban violated the First Amendment; (4) the forfeiture constitutes an "excessive fine[]" in violation of the Eighth Amendment;...