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.