FCC Hits TV Station With Maximum Fine for Fleeting Nudity in Newscast

The Federal Communications Commission has fined a television station $325,000 for allegedly broadcasting “extremely graphic and explicit sexual material”, i.e., indecent material.  The amount of the fine, underlying facts and the Commission’s reasoning for issuing the fine raise serious concerns:

On July 12, 2012, WDBJ(DT) in Roanoke, Virginia broadcast a 6:00 pm news story about whether the local rescue squad would let a volunteer, who was an ex-porn star, continue volunteering after an initial six month trial period.  The Roanoke Fire Chief sought legal advice from the County Attorney on the matter.  The story ran 3 minutes and 20 seconds.  The introduction to the story included video of the former adult film star from an adult video distributor’s web site.  The majority of the three-second video was of the former adult film star sucking her finger.  Along the border on the right side of the same video were several smaller images, one including a hand stroking an erect penis.  

This is the first instance where the FCC has issued the maximum fine to a broadcaster since Janet Jackson and the Super Bowl more than a decade ago.  The fine raises several concerns. First, the Commission discounts (indeed ignores) the newsworthiness of the story and the fact that it ran during the station’s 6:00 p.m. news.  Second, the Commission argues that the graphic nature of the allegedly indecent material outweighs the fleeting nature of the video.

In the decision, the FCC takes the position that imposing fines for fleeting expletives/videos remains constitutional.   The Commission cites as support a concurring opinion from a Supreme Court case in 2012 that focused on fleeting expletives.  That case however overturned a Commission decision imposing administrative sanctions for the broadcast of fleeting expletives.  The Supreme Court concluded that the Commission failed to issue the appropriate Public Notice in 2004 informing the public of the Commission’s policy change to start imposing fines for fleeting expletives.  It was because of the FCC’s lack of public notice that an appellate court dismissed the FCC’s fine of $550,000 in the Janet Jackson case. The Supreme Court declined to hear the FCC’s appeal of that decision.

The fleeting expletive case has reached the Supreme Court twice in the past several years, most recently in 2012.  The Supreme Court decisions in both instances ruled narrowly, basing their decision on the administrative issues facing the court and not whether fleeting expletives were constitutional.  A careful reading of the two Supreme Court cases and the oral arguments suggests that a majority of the court is more likely than not to rule that fining broadcasters for fleeting expletives is unconstitutional.

The Commission decision yesterday was 5-0.  Regrettably, “cleaning up the airwaves” has a good ring to the public, whether the Commissioner is Republican or Democrat.

As a result of yesterday’s action, the Commission’s fleeting expletive policy remains in full force and effect.  Further, the Commission appears unwilling to conduct the proper rule making proceeding to evaluate the fleeting expletive policy in light of the Commission.  Instead, the Commission’s position appears to be “business as usual” on fleeting expletives.

WDBJ(DT) intends to appeal the Commission’s decision.  It will take several years, but perhaps this case (or another like it) will eventually make its way to the Supreme Court and perhaps this time the Supreme Court will rule on the constitutionality of fleeting expletives.

In the interim, broadcasters must remain vigilant.  Until there is a change in the law (or in the Commission’s policy), all it takes is one oversight and three seconds of “indecent material” for the Commission to impose a maximum forfeiture.

U.S. Supreme Court Sides with Broadcasters in Indecency Cases

Today, the Federal Communications Commission’s broadcast indecency policy received, at most, a glancing blow from the U.S. Supreme Court. 

In a sharply limited decision, the Court, by an 8-0 vote (with Justice Sotomayor not participating) and for the second time since 2009, avoided difficult First Amendment questions about the FCC’s authority to restrict coarse language and nudity on broadcast television. In 2009, the Court held that the FCC’s adoption of the so-called “fleeting expletives” policy for broadcast indecency was neither arbitrary nor capricious in violation of the Administrative Procedure Act. This time, in  Federal Communications Commission, et al. v. Fox Television Stations, Inc., et al, the Court found that this policy, as applied to Fox and ABC, was impermissibly vague in violation of these broadcasters’ due process rights. The Court did not reach the First Amendment issues, choosing instead to vacate and remand the decisions of the 2nd Circuit that struck the FCC’s broadcast indecency policies on First Amendment grounds.

The Fox and ABC cases, which I’ve written about previously, involved challenges brought by broadcasters to the FCC’s broadcast indecency regulations. The broadcasters argued, among other things, that the Court should overturn its precedent in FCC v. Pacifica Foundation granting the FCC limited authority under the First Amendment to regulate broadcast indecency. While the Court today left the First Amendment issues open, Justice Kennedy, writing for the Court, found instead that the FCC “failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent.” As a result, according to the Court, the FCC’s policy was impermissibly vague with respect to the broadcasts at issue here. In a brief concurring opinion, Justice Ginsburg wrote that “[t]ime, technological advances, and the Commission’s untenable rulings in the cases now before the court show why Pacifica bears reconsideration.”

Some initial observations:

1)      The FCC’s “Fleeting Expletive” Policy Still Exists. The decision explicitly does not address the constitutionality of the FCC’s current indecency policy “as expressed in the Golden Globes Order [issued March 18, 2004] and subsequent adjudications.” This Order adopted the “fleeting expletives” policy and apparently remains in force. The Court found that the FCC remains “free to modify its current indecency policy in light of its determination of the public interest and applicable legal requirements.”

2)      Timing of the Alleged Violation Is Critical.  The Fox and ABC broadcasts occurred prior to March 18, 2004. According to the Court, “the Commission policy in place at the time of the broadcasts gave no notice to Fox or ABC that a fleeting expletive or a brief shot of nudity could be actionably indecent; yet Fox and ABC were found to be in violation.” As a result, timing of a disputed broadcast is critical for purposes of determining the precedential effect of this decision on other cases.

3)      The decision is limited in scope on indecency. The Court treated “fleeting expletives and fleeting nudity” as part of the same FCC policy articulated in the 2004 Golden Globes Order. This determination enabled the Court to dispose of both cases via the same vagueness rationale, thus avoiding the First Amendment issues.

4)      The Court’s decision gives clues on how it could rule on the Janet Jackson case. The opinion does not address the FCC’s pending Petition for a Writ of Certiorari from the U.S. Supreme Court in connection with the Janet Jackson “wardrobe malfunction” case. The FCC is seeking review of a decision by the U.S. Court of Appeals for the 3rd Circuit, which found that the Commission acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, when it fined CBS stations for violating the indecency policy. The FCC requested that its petition “should be held for [the Fox case] and then disposed of as appropriate in light of the Court’s decision.” In this regard, like the broadcasts for ABC and Fox in today’s decision, the Janet Jackson broadcast occurred prior to the March 18, 2004 release of the 2004 Golden Globes Order. As a result, “fair notice” is again at issue, particularly now that the Court has explicitly determined that the Commission’s policy extends to “fleeting nudity.” Given that the nudity depicted in NYPD Blue lasted about seven seconds and the "wardrobe malfunction" was clocked at less than one second, the Commission should have concerns about the impact of today's ruling on the Janet Jackson case.

5)      Processing the backlog of indecency complaints is a priority.  Big practical issues remain. For example, the FCC has a massive backlog of indecency complaints filed against broadcasters.  Such complaints often slow processing of applications and delay the closing of transactions. For now, observers must watch and wait to see how the FCC decides to proceed.  Expect the FCC to comb through the backlog of complaints and dismiss those cases built on “fleeting expletives” with respect to broadcasts that occurred prior to March 18, 2004.  The FCC could take the opportunity to dismiss those complaints that it deems to not implicate the agency’s current indecency policy.

In light of these developments, don’t expect the floodgates to open for the broadcast of coarse language or brief nudity on your local station any time soon. There are significant questions about how the Commission will enforce its indecency policies going forward. The hardest questions on broadcast indecency and the First Amendment will continue to be debated, but there’s every reason to expect that one day the Court will be asked to address them yet again.  In the meantime, stay tuned.

Will M.I.A.'s "Middle Finger Malfunction" at the Super Bowl Lead to FCC Fines?

Stop me if you’ve heard this before.  An entertainer’s provocative gesture during the Super Bowl halftime show riles viewers and leads to calls for action by the Federal Communications Commission. Sound familiar? 

This football season, the entertainer in question is musical artist M.I.A., who drew attention when she “flipped off millions of viewers during TV’s most-watched telecast of the year.”  During her halftime performance, she made the “middle finger” gesture while singing a song in which the “S-Word” was implied but not clearly sung. The incident, which some have called a “middle finger malfunction,” recalls the 2004 Super Bowl halftime show involving Janet Jackson.  The FCC imposed $550,000 in fines ($27,500 per station) against Viacom-owned CBS broadcast stations for Ms. Jackson’s infamous “wardrobe malfunction,” only to have the fines twice stricken by an appellate court – once on appeal from the FCC, and once on remand from the U.S. Supreme Court. 

So far, the FCC has not commented regarding whether any indecency complaints have been filed with the Commission about last night's program. Thanks to statutory changes made a few years ago, the maximum forfeiture penalty for broadcasts of indecent, obscene or profane material is now higher than when the Jackson case was decided: $325,000 for each violation or each day of a continuing violation, capped at $3 million for a single act or failure to act. 

I've previously blogged about the U.S. Supreme Court's review of the FCC’s authority to regulate broadcast indecency with respect to “fleeting expletives” (language such as the “F-Word” or the “S-Word”) and nude buttocks. The “middle finger” gesture, however, involves neither nudity nor spoken language and is not at issue in those cases. So, does a middle finger gesture on broadcast TV violate the FCC’s rules?

While many use the terms “indecency” and “obscenity” interchangeably, in fact the FCC enforces laws that target discrete categories of obscene or indecent programming on broadcast (not cable or satellite) TV: 

  • The FCC defines indecent material as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.”  Such material may only be broadcast during safe harbor hours (i.e., 10 p.m. to 6 a.m.).
  • The Supreme Court defines obscene material (which cannot be broadcast at any time) as material that meets a three-pronged test: 
    • An average person, applying contemporary community standards, must find that the material, as a whole, appeals to the prurient interest;
    • The material must depict or describe, in a patently offensive way, sexual conduct specifically defined by applicable law; and 
    • The material, taken as a whole, must lack serious literary, artistic, political or scientific value.

With respect to specific FCC guidance, the FCC does not appear to have issued any order finding the “middle finger” gesture to be obscene or indecent. A few years ago, the FCC briefly mentioned the gesture (fn. 94) in assessing a fine against Fox for “fleeting expletives” used by entertainer Nicole Richie during a televised awards show. The FCC argued that Fox was on notice that Ms. Richie had demonstrated a “penchant for vulgarity” by using the middle finger gesture during a previous broadcast. Separately, press reports indicate that the FCC received complaints about a 2009 awards show broadcast on NBC where director film Darren Aronofsky made the gesture on camera, but no FCC decision has been issued in connection with this broadcast. Alternatively, some have questioned whether FCC policies regarding the use of certain “visual images” in conjunction with song lyrics would encompass the middle finger gesture.

In my view, this sort of "Flying Fickle Finger of Fate" should not be deemed an FCC violation. There are definitional issues, First Amendment concerns and questions of whether the FCC has given fair, adequate notice.  Given the uncertainty about the FCC’s authority to enforce broadcast indecency policies due to the pending U.S. Supreme Court case, even if complaints are filed with the FCC, it is unlikely that the FCC would reach a decision on the complaints before the Court issues its decision.  In the meantime, it remains to be seen whether this halftime performance will sway public opinion on the issue or will influence the Court’s decision.

U.S. Supreme Court Considers the FCC's Authority to Regulate Fleeting Expletives, Nudity on Broadcast TV

If there was one surprise in this week’s oral argument at the U.S. Supreme Court about FCC regulation of broadcast indecency, it was the nudity in the courtroom. 

The Court is considering the Federal Communications Commission’s authority to regulate nudity and “fleeting expletives” on the broadcast airwaves in Federal Communications Commission, et al. v. Fox Television Stations, Inc. et al. The case involves the FCC’s appeal of two court decisions – one involving the Fox network and one involving the ABC network – that struck down the FCC’s “broadcast indecency” policies.  At issue is whether these FCC decisions violated the First and/or Fifth Amendments to the U.S. Constitution and whether the Court will reshape the FCC’s authority to enforce indecency standards for the broadcast airwaves.

Nudity, “Fleeting Expletives” and the Constitution

The consolidated appeal involves network broadcasts containing instances of the “F-Word” (used by Cher during a 2002 awards show on the Fox network and by Nicole Richie during a 2003 awards show on the same network), the “S-Word” (also used by Richie in the same show) and a bare backside (which appeared for fewer than seven seconds in a 2003 episode of ABC’s “NYPD Blue”).  The broadcasts aired outside the FCC’s “safe harbor” hours of 10 p.m. to 6 a.m., and in each instance, the FCC found the broadcasts to be actionably indecent, which the FCC defines as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.” The U.S. Court of Appeals for the 2nd Circuit eventually overturned these two determinations in separate appeals. 

  • Fox Television Stations, Inc.  In the case of the two live awards show broadcasts, the FCC found the broadcasts to be indecent based on changes that the FCC made in January 2003 to its “fleeting expletives” policy. The FCC declined to issue a sanction, however, because the broadcasts occurred prior to this policy change. In 2007, the U.S. Court of Appeals for the 2nd Circuit found that the FCC’s policy was arbitrary and capricious under the Administrative Procedure Act (“APA”).  In 2009, the U.S. Supreme Court reversed and remanded the 2nd Circuit’s decision on APA grounds without reaching the constitutional questions. On remand, the 2nd Circuit in July 2010 struck the FCC’s orders on constitutional grounds, finding the FCC’s policy to be impermissibly and unconstitutionally vague.   
  • ABC, Inc. In the case of the NYPD Blue episode, the FCC imposed an indecency forfeiture of $27,500 against several ABC network-owned stations and affiliates, finding that the view of a woman’s unclothed buttocks was “sufficiently graphic and explicit to support an indecency finding,” that the shots were “repeated” and that the scene was “pandering, titillating, and shocking.” In the ABC case, the 2nd Circuit, in reliance on its 2010 decision in the Fox case, tossed the FCC’s fine against the ABC stations (both network and affiliates).        

The Supreme Court has consolidated the FCC’s appeals of these two decisions by the 2nd Circuit.  The case brings new attention to the Court’s landmark broadcast indecency decision in 1978’s FCC v. Pacifica Foundation. There, the Court found that the FCC did not violate the First Amendment when it applied its definition of indecency to a broadcast of George Carlin’s famous “filthy words” monologue.  In upholding the FCC’s authority, the Court noted 1) the “uniquely pervasive presence” of the broadcast media, 2) that airwaves are available in the privacy of the home, 3) that broadcasting is “uniquely accessible” to children and 4) in the government’s interest “in the ‘well being of its youth’ and in supporting ‘parents’ claim to authority in their own household.”  Here, the Court has been asked to overrule Pacifica, and as expected, the oral argument dealt extensively with this precedent. 

Takeaways from the Oral Argument

  • While it is problematic to read too much into questions that the Justices ask at oral argument, the Justices clearly struggled with the implications of the FCC’s broadcast indecency enforcement.  Justice Sotomayor, who formerly served as a Judge for the 2nd Circuit, is not participating in the case.  As a result, any 4-4 decision would allow the 2nd Circuit’s decision to stand.  In addition, this consolidated appeal involves two related cases involving different parties as well as different aspects of the FCC’s policy (i.e., nudity vs. “fleeting expletives”); accordingly, the Court may decide to treat these categories differently with separate rulings.
  • Much of the oral argument focused on differences in content between broadcast channels and cable channels and on the pervasiveness of broadcasting compared to other forms of media. Broadcasters have asserted that Pacifica should be overturned because of the changes in the media landscape since 1978, among other reasons.  For example, Carter Phillips, counsel for Fox, asked “how is it permissible to allow the FCC to regulate the broadcast networks on standards that are fundamentally different than cable, the internet and every other medium that exists?” Justice Alito voiced his opinion that “broadcast TV is living on borrowed time. It is not going to be long before it goes the way of vinyl records and 8 track tapes.” 
  • While the facts before the Court involve television broadcasts, the Solicitor General, representing the FCC, argued that overturning Pacifica would “sweep away indecency restriction with respect to radio as well as television” and that “a lot of the most vile and lewd material really is in radio.”  Justice Breyer asked whether the “First Amendment forbids the application of a good guideline to this case” and referred to the potential reversal of Pacifica as “earthshaking.”
  • While some Justices appeared to have little appetite to overturn Pacifica, several Justices questioned the FCC’s handling of specific situations. For example, Justice Kagan said “the way that this policy seems to work, it’s like nobody can use dirty words or nudity except for Steven Spielberg.” Her comment refers to the FCC’s findings in other cases that the films “Saving Private Ryan” and “Schindler’s List,” both directed by Steven Spielberg, were not indecent. 
  • Chief Justice Roberts said that “[a]ll we are asking for, what the government is asking for, is a few channels where you can say I’m not going to – they are not going to hear the S word, the F word. They are not going to see nudity.” Justices Kennedy and Scalia considered whether to hold broadcast media to a different standard in an effort to preserve a “safe haven.”  Justices Kennedy and Scalia cited the “symbolic value” of allowing the government to use public airwaves to “insist upon a certain modicum of decency.”  It is noteworthy that Scalia wrote the opinion in the recent Brown v. Entertainment Merchants Association case, where the Court found that video games qualify for First Amendment protection. There, Justice Scalia wrote that “Crudely violent video games, tawdry TV shows, and cheap novels and magazines are no less forms of speech than The Divine Comedy, and restrictions upon them must survive strict scrutiny.” 
  • There was extensive discussion about the role of advertisers in encouraging broadcasters and cable programmers to limit the use of material that falls within the FCC’s indecency definition. Counsel also discussed whether and how broadcast standards and practices would be affected if Pacifica was overruled or limited.  
  • Counsel for Fox disputed the suggestion by Justice Kagan that the current system “seems to work.” He argued that the “whole system has come to a screeching halt because of the difficulty in trying to resolve these issues.” He referred to the hold up of many TV license renewals at the FCC, an issue we’ve blogged about previously.  
  • The FCC’s actions and its indecency policy were challenged as unconstitutionally vague under the Fifth Amendment on the grounds of a lack of fair notice of what was prohibited and of arbitrary and discriminatory enforcement. Some Justices questioned the FCC’s approach.  Justice Ginsburg referenced the “appearance of arbitrariness about how the FCC is defining indecency in concrete situations.” The Solicitor General conceded that “there is not perfect clarity in this rule” but that “the alternative [for example, bright-line proscriptions against certain words or nudity] … would be worse.”  He also argued that “there isn’t really a vagueness issue left with respect to the fleeting expletives in the Fox case, because the Court said [in 2009] that there is no problem of arbitrary punishment because there was no forfeiture or other sanction.” By contrast, the FCC fined ABC for the “NYPD Blue” broadcast, and the Solicitor General agreed that the vagueness issue remained in play for that broadcast. 
  • As for the nudity in the courtroom?  The Justices asked about permissible displays of nudity on broadcast television – for example, whether broadcasters could air the musical “Hair,” the opera “Metropolis” or other programs without running afoul of the indecency regulations. Seth Waxman, counsel to ABC, pointed out that the FCC has pending complaints “about the opening episode of the last Olympics, which included a statue very much like some of the statues that are here in this courtroom, that had bare breasts and buttocks.” Time will tell whether these courtroom displays will sway any of the Justices. 

The Court is expected to rule on this case during its current term, which ends in June.

Fairness Doctrine, Controversial FCC Policy and 1st Amendment Landmark, Dies at 62

The Fairness Doctrine, a longtime controversial feature of the Federal Communications Commission’s media policy and a landmark of First Amendment law, died Wednesday in Washington, DC. It was 62. 

The cause of death was the FCC’s decision to eliminate an “unnecessary distraction” as it deleted “83 outdated and obsolete media-related rules,” said FCC Chairman Julius Genachowski. The Fairness Doctrine had remained on the FCC's books despite not being enforced since 1987. Other announced deletions included the vacated 2003 broadcast flag rules and certain cable rules that had not been properly amended to reflect the Commission’s repeal of the personal attack and political editorial rules in 2000. Yesterday's decision also referenced the executive order signed by President Obama in January aimed at eliminating burdensome or unnecessary regulations of independent agencies. 

Born in 1949, the Fairness Doctrine was part of the FCC’s effort to require broadcasters to adequately cover, and to air conflicting viewpoints on, issues of public importance. At 20, the Fairness Doctrine survived a constitutional challenge in Red Lion Broadcasting Co. v. FCC. The U.S. Supreme Court found in 1969 that broadcasters have First Amendment speech rights but that the scarcity of broadcast frequencies justified the FCC’s exercise of authority via the Fairness Doctrine and associated rules. 

Nevertheless, by 1987 the FCC decided to stop enforcing the Fairness Doctrine, finding that the doctrine did not serve the public interest. In 1989, the U.S. Court of Appeals for the District of Columbia affirmed without reaching the constitutional issues. The change in enforcement paved the way for expansion in political talk radio. The Fairness Doctrine, however, remained on the FCC's books, and questions lingered about whether it would be revived.

The Fairness Doctrine is survived by other FCC rules governing political broadcasting, including requirements for broadcasters to provide reasonable access to candidates for federal elective office, to provide equal opportunities to political candidates for any legally qualified office, to apply the lowest unit rate for candidate ads during specified days before primaries and elections and to properly identify sponsors of political ads. Yesterday’s order did not address the “Zapple Doctrine,” a rule based on the Fairness Doctrine that required stations to provide “quasi-equal” opportunities when supporters of a candidate appear on a broadcast station. Unlike the Fairness Doctrine, the Zapple Doctrine never has been explicitly overturned. In addition, the ongoing vitality of the Red Lion decision and the FCC's regulatory authority likely will be among the issues in the U.S. Supreme Court’s consideration of the FCC’s appeal of U.S. Appeals Court decisions finding FCC indecency policies to be unconstitutional.

The Order will take effect upon publication in the Federal Register.

Hidden in Plain View: The Threat Within the FCC's Enforcement of its Net Neutrality Rules

Now that the Sturm und Drang over the FCC’s new Net Neutrality Rules is in full throat, some lurking concerns warrant more attention – namely, concerns about the FCC’s enforcement of its new rules and the administration of its complaint process.  The FCC states that it seeks “prompt and effective” enforcement of its new rules, but eyebrows are arching regarding whether the current structure will effectively promote this goal. 

"The FCC states that it seeks 'prompt and effective' enforcement of its new rules, but eyebrows are arching regarding whether the current structure will effectively promote this goal."

First, some context.  Assume for the moment that you provide fixed or mobile broadband service and that the new rules survive unscathed after the administrative, judicial and legislative battles that are almost certainly on the way.  Someone believes that you have violated these rules – for example, your subscriber believes that you have failed to adequately disclose your network management practices, or an edge provider believes that you have blocked its lawful content (if you are a fixed provider) or an end user complains that you have unreasonably discriminated in transmitting their lawful network traffic over your network.  How can this aggrieved party seek legal relief, and what relief is available? 

The FCC has retained independent enforcement authority for the net neutrality rules, but as noted in Matthew Lasar’s overview at Ars Technica, the FCC's enforcement process is overwhelmingly complaint-driven.  The new rules give the aggrieved party two “backstop mechanisms” at the FCC in the event that the interested parties cannot resolve their dispute privately: a formal complaint process and an informal complaint process. 

  • The formal complaint process imposes procedural obligations on the complainant and launches an adjudicatory proceeding.  Formal complaints will be addressed through “accelerated docket” procedures.  Before filing a formal complaint, the complainant must notify the respondent in writing that the complainant intends to file the complaint.  The complaint must comply with FCC processes, and the complainant must pay a filing fee (which may be the FCC Enforcement Bureau’s version of “paid prioritization”).  The complainant must “plead fully and with specificity the basis of its claims and to provide facts, supported when possible by documentation or affidavit, sufficient to establish a prima facie case of an open Internet violation.”  The rules set forth a timetable for answers and replies, and the FCC will issue an order “determining the lawfulness of the challenged practice.” 
  • The informal complaint process, by contrast, is more akin to tossing “paper grenades.”  Anyone with a computer may submit informal complaints (for example, via the FCC’s website or to the agency’s Consumer and Government Affairs division) in an effort to draw the FCC’s attention to challenged practices and perhaps spark an investigation.  There are no “accelerated docket” procedures.  The FCC has stated that individual informal complaints will not typically result in written Commission orders, and the potential remedies and sanctions are unclear.

As Larry Downes describes in his essay regarding the costs of enforcement of net neutrality rules, allowing “any person” to launch net neutrality complaints triggers inefficiencies and transaction costs because the filer can shift enforcement costs to the FCC or to ISPs.  Its not hard to imagine a disgruntled group campaigning and recruiting others to file loosely worded complaints that tie up the resources of broadband providers as they respond to paper grenades launched via the FCC’s electronic transom.  What is hard is running a small business or getting financing while buried in paper when an FCC decision on a complaint – even in a frivolous case – may be months away. 

"Given the FCC's lack of resources (and authority?) to police the entire Internet and its long-standing enforcement track record, we should expect the process to remain complaint-driven..."

Given the FCC’s lack of resources (and authority?) to police the entire Internet and its long-standing enforcement track record, we should expect the process to remain complaint-driven; however, reliance on a formal complaint process alone would reduce the incentive for “any person” to file complaints in bad faith.  The FCC’s decision to make available the “informal” process in addition to the “formal” process may turn out to be costly for broadband providers.  Here’s why:  

  • While the FCC has stated that “any person” may file a complaint, the formal complaint process has more mechanisms in place to deter the filing of non bona fide complaints – for example, there’s a $200 filing fee, procedural requirements and an “abuse of process” sanction against parties who file “unlawful” frivolous pleadings.  These mechanisms should make it much harder for competitors, disgruntled employees or others who suffer no actual harm to game the process. 
  • The availability of informal processes may encourage the filing of “cookie cutter” complaints, where persons or groups may seek to launch a barrage of nearly identical complaints in an effort to get the FCC staff’s attention for political purposes. 
  • The FCC does not set forth any particular remedy for an informal complaint other than saying that the FCC would “take appropriate enforcement action, including the issuance of forfeitures” for any net neutrality violation. 
  • The FCC did not adopt any specific forfeiture amounts for violations, so the penalty would likely be set on a case-by-case basis. 

Also, if what is past is prologue, broadband providers should have concerns that the mere filing of an informal complaint, even a frivolous one, would have other consequences.  Consider the case of those broadcasters who have found that meritless indecency complaints have hindered their ability to conduct legitimate business.  The reason is the “enforcement hold” that the Enforcement Bureau imposes against broadcasters’ FCC applications (e.g., license renewals, approvals for transactions) when one or more complaints are filed against their broadcast station(s).  Under FCC policy, the presence of this “red flag” can force the broadcaster to become involved in potentially protracted negotiations to get FCC clearance for their proposed transaction or license renewal.  This pressure has resulted in some broadcasters giving up legal rights by entering into consent decrees (whereby the station pays a penalty to resolve the complaint but does not admit liability for the conduct) or tolling agreements (where the broadcaster agrees to forego its rights to challenge an FCC action that takes place outside of the statute of limitations; i.e., their “shot clock” for reaching a decision) with the FCC.  Essentially, licensees often face intense pressure to agree to “voluntary” concessions and to raise the white flag in an effort to get the FCC to drop their red one.

One way for broadband providers to minimize liability is to be sure that they are complying with the FCC’s transparency requirements.  Providers that make adequate disclosure of their network management practices, performance characteristics and commercial terms of service will enjoy greater latitude in negotiating with the FCC.  And, so long as those practices are followed, a complaining party will find its burden a bit more difficult to meet. 

Nevertheless, with the broadcast indecency lesson in mind, broadband providers should be concerned.  It is reasonable to expect significant litigation over the rules, just as the FCC’s indecency policies have been heavily litigated. The FCC may hold up informal complaints for a protracted period as the legal challenges continue – recall that there is no “accelerated docket” for informal complaints and even if there was, the FCC may claim authority to waive any its internal timetables for “good cause.”  Such a litigation tangle may result in stalled FCC enforcement and delays in application processing – delays that could apply differently to different categories of service providers because some are more dependent on FCC licensing than others. 

In short, enforcing the FCC’s net neutrality rules represents a regulatory thicket for broadband providers and others – one that is worth the effort to navigate around given the uncertainty and the legal challenges to come. 

Appeals Court Rules Against FCC's Indecency Policy ... Again.

The FCC suffered another setback to its broadcast indecency policy earlier this week when the U.S. Court of Appeals for the 2nd Circuit threw out the FCC’s fine against the ABC Television Network and its affiliates for broadcast of an NYPD Blue episode.  Although the decision is not binding precedent, the willingness of the 2nd Circuit to throw out yet another FCC indecency fine on constitutional grounds raises the stakes when the U. S. Supreme Court hears this and related indecency cases in the future. 

The case involved a February 2003 broadcast by the ABC Television Network of an episode of NYPD Blue that depicted a woman’s nude buttocks for less than seven seconds.  In February 2008, the FCC determined that the depiction was indecent and fined ABC and each of its affiliates $27,500 per station for broadcasting the program.  ABC and its affiliates appealed the FCC’s decision to the 2nd Circuit.

In July 2010, in a separate case, the 2nd Circuit found the FCC’s “fleeting expletives” indecency policy unconstitutionally vague and therefore in violation of the First Amendment when applied to a Fox Television broadcast involving expletives uttered by Cher and Nicole Richie in the 2002 Billboards Music Awards Show.  Last November, the 2nd Circuit denied the FCC’s request for reconsideration of that decision.  

The Fox decision played a role in the NYPD Blue case as well.  In August 2010, ABC filed a motion for summary judgment requesting that the 2nd Circuit throw out the February 2008 forfeiture against ABC and its affiliates on grounds that the 2nd Circuit decision in the Fox case invalidates the forfeiture.  The 2nd Circuit agreed, holding that the Fox case struck down not only the FCC’s “fleeting expletive” policy but the FCC’s indecency policy in its entirety.  The court did not consider relevant that Fox broadcast a live unscripted show whereas ABC broadcast a scripted, recorded show.

The 2nd Circuit decision is not precedential (future parties may not rely on the decision); rather it is an order dismissing the petitioning broadcasters’ motion for summary judgment.  What is relevant is the 2d Circuit, the FCC and ABC agreed that the decision in the Fox case invalidated not only the FCC’s fleeting expletive policy, but the agency’s underlying indecency policy as well. 

It is unclear whether the FCC will appeal the nonbinding NYPD Blue decision.  Some expect the Supreme Court next term to hear argument on the Fox case, at which time the Supreme Court could consolidate the Fox case, today’s decision and the indecency case involving the "wardrobe malfunction" at the 2004 Super Bowl, pending before the 3rd Circuit.  The Supreme Court could rule narrowly on the issue on the constitutionality of the FCC’s fleeting expletives policy or more broadly with regard to the FCC’s entire indecency policy.