CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

When the Supremes decline to review a case (which they do in the vast majority of cases that get filed with the high court), the action is normally reflected in a simple nine-word order – “The petition for a writ of certiorari is denied.” That means that at least six of the justices saw no reason to hear the appeal. The final order in the Jackson case followed that course.

But in the Jackson case, Chief Justice Roberts bothered to write a two-page concurring opinion questioning whether the Third Circuit had really gotten it right. The Third Circuit’s decision was based on the notion that the half-second exposure of Ms. Jackson’s right breast was essentially the same as a “fleeting expletive”. As to that analogy, Roberts says “I am not so sure.” As he sees it, images are different from words. To hammer that point home, he quotes the prosaic proverb, “a picture is worth a thousand words”.

But, given the Court’s decision in FCC v. Fox, Roberts acknowledges that the distinction is in any event immaterial: “[i]t is now clear that the brevity of an indecent broadcast – be it word or image – cannot immun­ize it from FCC censure.”

This underscores the narrowness of the Fox decision and the continuing vitality of indecency regulation, at least in the Chief Justice’s mind. While the bottom line in Fox was that Fox and ABC got off the hook, that happy result was based on the technicality that the broadcasts in question had occurred before the Commission had announced, in 2004, that fleeting expletives (and, by extension, fleeting images) were taboo. The Court’s opinion left wide open the question of whether the FCC could, consistently with the First Amendment, penalize such broadcasts occurring after the 2004 announcement. It also left open the question of whether the FCC could penalize other instances of non-fleeting language (or images), regardless of whether they were aired before or after the 2004 announcement.

Roberts’s separate opinion clearly suggests that he, for one, believes that the FCC’s indecency policies can, should and do live on post-Fox. 

On the other hand, adding still more flair to the Court’s denial of review in the Jackson case, Justice Ginsburg also weighs in with a concurring opinion. It consists of one sentence, which we reproduce here in toto:

The Court’s remand in FCC v. Fox Television Stations, Inc., 567 U. S. ___ (2012), affords the Commission an opportunity to reconsider its indecency policy in light of technological advances and the Commission’s uncertain course since this Court’s ruling in FCC v. Pacifica Founda­tion, 438 U. S. 726 (1978).

That, of course, echoes her concurring opinion in Fox in which she announced her strong belief that the Court’s first and only (thus far) endorsement of indecency regulation (in Pacifica) was “wrong”. (Memo to Justice Ginsburg: Could you try not to sugarcoat it next time?)

So there you have it: a court that is still split on whether the government can constitutionally regulate broadcast indecency. We’ve had to live in the shadow of that uncertainty since the 1978 Pacifica decision. It looks like we’ll be living with for some time to come.

Several justices have historically demonstrated uneasiness with the notion of removing regulations they perceive as necessary (or at least useful) in maintaining some sense of morality or decorum on the public airwaves. No big surprise there – I have repeatedly noted in earlier posts that the Court has been cautious about language and decorum. (For instance, they frown on use of the actual words – fuck, shit, etc. – in the courtroom or in their opinions. They opt instead for euphemisms like “f-word” and “s-word”.) In particular, it was always highly unlikely that Justices Roberts, Scalia and Alito were going to sign on to a decision opening the airwaves to what they felt would be a cacophony of indecency.  

Furthermore, this Court has always been somewhat cautious when it comes to First Amendment cases (as I have discussed in previous posts). I have detected little sentiment on the Roberts Court for actions that completely overturn longstanding laws based on facial First Amendment challenges. And, truth be told, the Court has historically not shown any such sentiment. In fact, the longstanding principle of “constitutional avoidance” holds that the Court will not take on a constitutional issue when it can dispose of a case via other means.

So it’s not surprising that the Court as a whole may have been reluctant to push the button on the First Amendment thermonuclear option when a narrower alternative was available. 

Blogmeister: But the “narrower” alternative here was still a constitutional provision – the “due process” clause of the Fifth Amendment. How does that fit into any “constitutional avoidance” notion?

Swami: Sure, it’s still the constitution, but look at the differences. Assume that everybody agrees that the FCC should not have penalized the Fox and ABC broadcasts at issue here. To get to that result through the First Amendment, the Court would have had to hold that the FCC’s indecency policies – or at least some significant subset of them – are barred by the First Amendment. That would open up a whole host of follow-up questions that would almost invariably take the Court back to Pacifica. By contrast, the Fifth Amendment approach the Court used allowed them to find that, whether or not the indecency policy is consistent with the First Amendment, the two broadcasters (Fox and ABC) didn’t get the due process notice to which they were entitled under the Fifth Amendment. Net result: the penalties meted out to those two broadcasters are tossed without anybody having to come to grips with the First Amendment arguments.

This is, of course, very frustrating for those of us who have been waiting patiently for some conclusive ruling by the Supreme Court as to the constitutionality of the FCC’s indecency policy. When it agreed to hear the Fox case this time around, the Court specified that the only question to be considered was

[w]hether the Federal Communications Commission’s current indecency-enforcement regime violates the First or Fifth Amendment to the United States Constitution.

Many of us read that to refer to the overall indecency regime as a whole, not merely the particular application of that regime to two particular parties. We obviously guessed wrong.

(This is a good time to point out another possible reason that the Court decided this unanimously and narrowly. It’s a hypothesis advanced by UCLA professor Eugene Volokh. Volokh theorizes that the recusal of Justice Sotomayor left the Court in serious danger of a 4-4 split on the merits if it ruled on the overriding First Amendment issue. That would have been the worst possible result, leaving the Second Circuit decision in place but providing no Supreme Court precedent. The narrow decision was therefore a tactical means of getting to a result favored by all justices without forcing the Court through a divisive and ultimately deadlocked First Amendment analysis.)

Blogmeister: But that doesn’t mean that the First Amendment problems with the FCC’s indecency policy have gone away, does it?

Swami: Absolutely not. That issue isn’t going away. The Court’s unwillingness in the Fox case to address that issue squarely, for once and for all, means we’re almost certain to be back here several years from now (maybe just in time for another election day). 

Blogmeister: OK, so here we are, with a very narrow, largely analysis-free Supreme Court decision based on Fifth, not First, Amendment grounds – a decision that appears to apply only to these three broadcasts.   What comes next?

Swami: That’s unclear.  According to the Supremes, “[t]he judgments of the United States Court of Appeals for the Second Circuit are vacated, and the cases are remanded for further proceedings consistent with the principles set forth in this opinion.” So the Second Circuit’s broad, sweeping (and, to many us, welcome) opinion holding the indecency policy to be inconsistent with the First Amendment has now been tossed by the Supremes. As a result, the FCC’s indecency regime, as a whole, remains in place.

I’m guessing the Court is also telling the Second Circuit that it should simply and quickly issue an order reversing the FCC’s actions for the reasons stated by the Supremes. Since the Second Circuit obviously feels strongly about this case – you can tell that from its first two opinions – I suppose it’s possible that the Circuit might use the opportunity of a remand to signal how broadly it plans to read the Supreme Court’s decision and whether the Second Circuit will continue to be the “go-to” circuit for indecency cases. And you can take the Swami’s word for it – there will be more indecency cases. As the Supreme Court expressly observed, its decision leaves the courts “free to review the current policy or any modified policy in light of its content and application”. 

The more intriguing question, though, is how the FCC will react to this decision. It obviously just dodged a bullet. Does it tweak its indecency policy, does it massively overhaul that policy, does it scrap the policy entirely, or does it just leave it the way it’s been for the last six-seven years? In light of the Commission's traditional behavior, I suspect it’ll be the last option – the FCC as Decency Police will continue to pound the beat – but you never know. After all, we now have Justices Thomas and Ginsburg on the record saying that they seriously question whether the indecency policy could withstand First Amendment scrutiny. At some point the FCC may be able to take a hint.

Blogmeister: And beyond that, what does the Supreme Court’s decision mean for indecency cases pending at the FCC?

Swami: That, too, remains to be seen. In a perfect world, the Commission would go through all the million or more still-pending indecency complaints and divide them into two groups: (a) complaints involving “fleeting expletives” and (b) all others. Then it would take all the complaints in Group (a) and subdivide them into two categories: (i) those that occurred prior to the 2004 Golden Globes decision that announced an end to the Commission’s previous “fleeting expletive” policy (i.e., the policy that let such instances slide without penalty), and (ii) those that occurred after. I get the need to draw that latter line from Justice Kennedy’s majority opinion. He makes a point of saying that “[the] regulatory history, however, makes it apparent that 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”  (emphasis added). 

So once all complaints involving fleeting expletives or nudity that occurred before the 2004 Golden Globes decision are identified, the Commission would promptly dismiss them, since they would all be essentially identical to the Fox/NYPD Blue situations. All other complaints would be left for routine processing.

But with the sheer volume of pending complaints, it’s hard to imagine that the Commission is in a position even to begin such a triage process.

And let’s not forget the fact that, even if the FCC goes ahead with indecency complaints which may survive the Supreme Court’s decision, and even if it ends up issuing fines in those cases, the government will be hard-pressed to collect any fines in cases older than five years. That’s because of 28 U.S.C. §2462, a federal law that requires that lawsuits by the Feds to enforce a civil fine, penalty or forfeiture be initiated within five years after the underlying claims accrue. The Communications Act provides that, if a licensee hit with a fine simply declines to pay, the FCC’s only recourse is to sue the licensee for payment – and until that suit is finally resolved in favor of the FCC, the Commission can’t use the licensee’s alleged violence in any way that might prejudice the licensee. So any case that would be subject to the five-year statute of limitations in 28 U.S.C. §2462 could (and, in an ideal world, should) all be summarily tossed regardless of the Fox decision.

Blogmeister: When you look into your crystal ball, what do you see happening on the indecency front?

Swami: The Court told the FCC expressly that the Commission “remains free to modify its current indecency policy in light of its determination of the public interest and applicable legal requirements.” And it told the courts that they are “free to review the current policy or any modified policy in light of its content and application”. 

So we could see the FCC revise its policy. Or we could see the FCC stick to its guns, applying the current policy against another broadcaster in one of those nonfleeting expletive or post-Golden Globe cases. If that broadcaster then brings challenges the constitutionality of the entire scheme, that challenge could work its way up the courts, finally returning to the Supreme Court, maybe just as we round into yet another Presidential election year.

Or not. Concentrate and ask again later.

In fact, it assiduously avoided even coming close to Pacifica. Pacifica, of course, upheld – against a strong First Amendment attack – the FCC’s general authority to regulate broadcast indecency. This time around, the Court is relying on the Fifth Amendment’s due process clause (which, for our purposes here, assures adequate “notice”). Hence, Pacifica lives on.

But for how long? That’s where Ginsburg’s terse concurrence is particularly intriguing. It reads, in its entirety, as follows:

In my view, the Court’s decision in FCC v. Pacifica Foundation, 438 U. S. 726 (1978), was wrong when it issued. Time, technological advances, and the Commis­sion’s untenable rulings in the cases now before the Court show why Pacifica bears reconsideration. Cf. FCC v. Fox Television Stations, Inc., 556 U. S. 502, 532–535 (2009) (THOMAS, J., concurring).

Now bear in mind that, the last time the Fox case rolled through the Supremes (back in 2009), Justice Thomas said pretty much the same thing (as Ginsburg's citation to Thomas’s 2009 Fox concurrence acknowledges). That makes two justices, on polar opposite ends of the ideological spectrum, ready to pound a stake into the heart of Pacifica. 

Check back here later for a more complete analysis by Swami Kevin Goldberg.

Swami: The government was claiming that, in return for the supposedly free spectrum, broadcasters should be happy to cough up some of their constitutional rights. I have a real hard time with that notion, particularly because even the Pacifica court didn’t seem to go down that road. But maybe the government is looking to move away from the “protect the kids” justification in light of the Supremes’ Brown decision last term. (In that case, the Court threw out a California statute restricting the sale of violent video games to minors. The Court held that the state hadn’t demonstrated that such games cause harm to minors. Justice Scalia, writing for the majority, observed that “disgust is not a valid basis for restricting expression”.)

Blogmeister: Another thing. How about the Fox lawyer’s willingness to throw the radio industry under the bus? Noting that Pacifica involved a radio broadcast, Justice Alito asked whether there is a basis to distinguish between radio and TV for purposes of indecency regulation. Counsel for Fox seemed happy to say that radio is different and, thus, on its own to argue that the FCC’s indecency policies can’t be applied to radio.

Swami: That was pretty striking. But for my money, the highlight of the argument came when ABC’s counsel pointed out to the Justices that the Supreme’s courtroom itself features images of bare breasts and buttocks. As counsel proceeded with his argument, he apparently noticed that Scalia was looking around the court to see if he could see those images. Counsel happily pointed them out to the Justice, noting that counsel hadn’t focused on them before. “Me neither”, responded Scalia. And, as a service to our readers, here’s one of those images (depicting Philosophy, from the north wall frieze):

Blogmeister: OK, enough of the color commentary. Let’s get down to the real nitty-gritty. How do you figure the Court’s going to come out here? Are you sticking with your prediction from last June?

Swami: I still see Justices Kagan and Ginsburg voting in favor of the broadcasters. Not a big surprise – at least to me – since I had them both in this camp when I made my initial predictions last year. Both Kagan and Ginsburg expressed serious concern about the “appearance of arbitrariness about how the FCC is defining indecency in concrete situations”, as Ginsburg put it. I thought it was noteworthy, too, that Justice Ginsburg – an opera buff – pointedly asked whether televising a nude scene from The Makropulos Affair (a Czech opera – who knew? – apparently misidentified in the official transcript as “Metropolis”, at least according to some commentators) would run afoul of the FCC. 

Blogmeister: I just moved The Makropulos Affair way up in my Netflix queue.

Swami: Not to be confused with Fritz Lang’s great “Metropolis”, the classic 1927 sci-fi film. 

But enough about movies, operas, Kagan and Ginsburg. On to the other side of the Court, where it seems equally clear that Chief Justice Roberts and Justice Scalia are two solid votes for the FCC. Both surprised me a little, since they’re key switches from my predictions last summer. I figured that Scalia would set aside his morality-tinged aversion toward indecent speech in favor of his longstanding interest in protecting even controversial speech. Also (as I pointed out last year), his opinion in the Brown case sure suggested that he doesn’t buy into the “we must protect the kids” rationale that underpinned the 1978 Pacifica decision. And for Roberts, I thought he would stick with the position he staked out in Snyder v.Phelps and United States v. Stevens. I probably shouldn't have trusted my gut on either one.

During the argument, both Roberts and Scalia clearly indicated that they believe that broadcasters have a higher responsibility to society, and that the government is entitled to insist on what Scalia termed a “certain modicum of decency”. It looked like they were buying into the government’s new contract theory – i.e., since the government is supposedly giving broadcasters their lucrative spectrum for free, the government can exact something in return. Seeming to step out of his role as judge and into the role of regulator, Roberts said that “[a]ll we are asking for, what the government is asking for, is a few channels where you are not going to hear the S word, the F word. They are not going to see nudity.”   Shoot, simply his use of “S word” and “F word” alone shows you where he stands. Ditto for Scalia, who used similar terms to refer to “shit” and “fuck”.

Blogmeister:  Here’s an interesting factoid: the only two times the Supreme Court has considered whether the FCC can penalize the broadcast of certain words, none of those words has been spoken during the oral arguments. That’s more than two hours of people arguing about the use of a small handful of particular words, and those words never make an appearance. (Check it out: recordings of the arguments in Pacifica and Fox are available on-line.) 

Maybe I’m missing something, but if nobody even says what the words are – and everybody instead pussy-foots around them – that suggests that the words themselves have some inherent mystique that makes them different from all other words. Different and, therefore, subject to different treatment by the government. But words are just words, collections of letters and sounds, with no force in and of themselves. So a failure even to mention what the words at issue are could be seen as a major concession that they really are different. Roberts’s and Scalia’s references to “the S word” and “the F word” reflect their apparent belief that one should not utter the words even in a dispassionate judicial forum in which those words are the very focus. That’s obviously bad news.

Swami: Agreed. (And if you’ll notice: I don’t share the Justices’ aversion to using the words themselves. Before we move on with my predictions, I should just come out and admit that, if I were on the Supreme Court, I’d vote to overturn the indecency regulations.)

So if I’m right on those four, the count’s at 2-2. Since Justice Sotomayor has recused herself from the case – presumably because she was sitting on the Second Circuit when both Fox and ABC rolled through on their way to the Supremes – it will take only four votes, total, to avoid reversal of the decisions below (both of which favored the broadcasters). Where are the other justices?

As is his custom, Justice Thomas didn’t open his mouth during the argument – he hasn’t asked a question during the last five and a half terms – so there’s nothing new there to analyze. I’m sticking with my earlier prediction: not only will he rule for the broadcasters, but he'll actually go the farthest in doing so. He may even take the position that both Pacifica and Red Lion should be abandoned by the court. 

Blogmeister: For the neophytes among our readers, we should explain that “Red Lion” was the 1969 case in which the Supremes held that the First Amendment rights of broadcasters can be abridged by the FCC because spectrum is scarce. Tossing Red Lion would be a huge development in communications law. When the Fox case passed through the Supreme Court back in 2009, Thomas issued a separate opinion observing the “doctrinal incoherence” of Pacifica and Red Lion and expressing an openness to reconsidering both. The Swami may be onto something here. 

Swami: Right, and that might seem very good for the broadcasters. But what if Thomas can’t get a majority of his colleagues to join him? He could end up just writing another separate opinion, which might not be useful in getting the indecency issue resolved once and for all. (More on that later.)

Anyway, Justice Alito seems pretty solid back the other way. In my view, of all the justices he’s the least friendly toward First Amendment rights. He did little during oral argument to make me believe that he’ll change that in this case. He pointed out that the number of over-the-air viewers is shrinking and asked, “why not let this die a natural death?”

Blogmeister: So whether or not there’s a First Amendment violation, he’d be content to just stand aside and let nature take whatever course it might? That’s some First Amendment sensitivity.

Swami: Yeah, that’s why I see him as a vote for the FCC here, which (if I’m right about everybody else so far) still leaves us at 3-3.  But don’t forget that we’ve also got Justices Breyer and Kennedy to consider. Fortunately, I had both in the pro-Fox camp last summer, and the oral argument didn’t fully move me off that.

Let’s start with Kennedy. He seemed skeptical about the government’s claim that there may be some symbolic value in imposing different indecency standards on broadcast TV as opposed to, say, cable. He also showed the most interest in the availability of the V-Chip, which could mean that he sees that as a non-regulatory answer to any possible concerns about children’s access to indecent programming. But he also expressed concern that overturning the indecency rules would inevitably open the door to the all kinds of vulgar television programming. He’s a question mark here.

Blogmeister: Which makes Justice Breyer crucial. 

Swami: And, unfortunately, Breyer seemed confused at times, particularly when he asked the government’s lawyer to walk him through the procedural posture of the case. He also seemed surprised that the ABC bare buttocks case was there at all, as if the Court should instead have been looking only at the Fox fleeting expletives case.

To me, the key to Breyer is his apparent concern about whether the Court really has to, or should, overrule Pacifica.  He seemed to me uncomfortable about holding Fox liable for the fleeting expletives, but possibly more willing to let the FCC penalize the nudity in NYPD Blue. Importantly, he seemed to feel that both results could be reached using the existing Pacifica standard. 

Blogmeister: That doesn’t surprise me. The Supreme Court traditionally is reluctant to overrule itself. And this may be a good example of why. Pacifica was decided back in 1978. It involved an extreme set of facts – the George Carlin monologue at issue involved 12 minutes of the classic “seven dirty words” repeated over and over. The Court in Pacifica emphasized that its decision there was limited to the facts of the case. In his crucial concurring opinion Justice Powell stressed that that narrow focus would be “conducive to the orderly development of this relatively new and difficult area of law” by the Commission and the courts. 

The problem is that that “orderly development” hasn’t happened.

Instead, over the intervening three-plus decades the Commission has gone back and forth, up and down, this way and that way on indecency. And, most importantly, the “standards” it has invoked over the years have not been reviewed by the courts. (That’s the result of a number of factors, including the Communications Act’s odd provisions concerning judicial review of forfeiture decisions.)

It’s as if, 34 years ago, the Court held that it’s OK for the government to penalize folks driving at 100 miles per hour, but at the same time declined to say whether the government could penalize drivers at slower speeds – leaving that question to be decided in later cases through the “orderly development” of the law. No such later cases get to court. Then, 34 years later, the government tries to fine somebody for driving at 20 mph, and that guy challenges the fine, asking the Court (among other things) to throw out the 34-year-old decision as wrong. In such circumstances, the Court might figure that it could reverse the 20 mph conviction without having to toss out the earlier 100 mph ruling. 

Breyer seemed to be thinking that, maybe, even if Pacifica was and remains good law, the Commission’s Fox and ABC decisions can’t be justified.

Swami: So maybe he’ll write his own separate opinion laying that out. But if he does believe that the Second Circuit reached the correct result, even if for the wrong reasons, the bottom line would be good for broadcasters. Unless the FCC gets five votes to reverse the result below, that result would stand. So if Ginsburg, Kagan, Thomas and Breyer – and possibly Kennedy – all agree that the Second Circuit’s reversal of the FCC was correct, broadcasters should prevail.   

Let’s go on the record: the Swami says that the split among the justices will most likely be 5-3 (affirming the Second Circuit) or 4-4. That’s just a count as to which sides the justices take. Almost certainly we’ll see a split court with multiple opinions and, probably, no single opinion reflecting the views of a majority of justices.

Blogmeister: And while that’s not a bad thing, it’s not optimal. Multiple opinions, including separate concurrences from Thomas (going the furthest, possibly urging that Red Lion be overruled) and/or  Breyer (staying the narrowest, probably looking to preserve Pacifica) would leave everybody in a very frustrating position: we would still not know precisely what programming the Commission can constitutionally prohibit as “indecent”. We’d be back on the quest for “orderly development” of this “difficult area of law”. We can all hope that some such “orderly development” might occur, but based on the last 34 years of that same quest, it’s hard to be optimistic.

Swami: Which kinda puts us right back where we were before all this right? In a place where the broadcasters lack any real certainty as to when they’ll be punished.

To review the recent history of the case, we go back to 2008, when the Third Circuit first reversed the FCC’s decision to whack CBS with a $550,000 fine. Its decision was based on administrative, rather than constitutional, grounds. That is, the court concluded that the FCC’s imposition of a fine for a “fleeting” exposure of a breast was inconsistent with previously-established Commission policies. While the FCC can, of course, change its policies if it wishes, in doing so it must provide notice and an explanation of the change. According to the court, the Commission came up short on the whole notice/explanation thing. Because it found that the case could be resolved on non-constitutional grounds, the court did not take on CBS’s First Amendment arguments.

The FCC asked the Supreme Court to review the Third Circuit’s decision. However, in the meantime the Supremes considered a similar decision from the Second Circuit in the Fox case. In that case, the Supreme Court held that the FCC had adequately explained the apparent abandonment of its “fleeting expletive” policy. As a result, in May, 2009, the Supremes shipped the Fox case back to the Second Circuit for further consideration, and at the same time it shipped the CBS case back to the Third Circuit.

A year later (in July, 2010), the Second Circuit cranked out its decision on remand. There the Second Circuit held that the Commission’s indecency policy violates the First Amendment because it is unconstitutionally vague.   The FCC promptly asked the Supremes to look at that decision, and the Supremes agreed. As noted above, we’re expecting that that case will be argued in early 2012, and a decision should be out by July, 2012.

Meanwhile, the Third Circuit took its own sweet time . . . some 16 months longer than the Second Circuit. And the result of its deliberations, issued November 2, 2011, is nowhere near as dramatic as the constitutional gauntlet thrown down by the Second Circuit.

Instead, the Third Circuit has again concluded that the FCC’s decision in CBS reflected a change in policy that was not adequately announced or explained. Even though the Supreme Court’s 2009 opinion in Fox accorded the Commission considerably greater leeway to change policies than the Commission had previously been thought to enjoy, the Third Circuit remains convinced that the FCC’s CBS decision cannot survive even the more relaxed standard set out in Fox. 

And even the dissenting judge on the Third Circuit panel would reverse the CBS decision and remand it to the FCC. In his view, the Commission did not apply the proper standard of mens rea (a legal concept relating to the accused party's level of improper intent or "guilty mind"), so he would send the case back to the Commission for further consideration.

Where the case goes from here isn’t clear. The Commission could ask the Third Circuit to reconsider its position. (That’s the approach the Commission tried, without success, in the Second Circuit.) The Commission could try to haul CBS back up to the Supremes. Or the Commission could throw in the towel.

Since the Commission hasn’t said die on this yet, it’s probably a pretty good bet that they will continue to fight the fight, at least in the short term. The goal would be to try to keep the case alive in some venue at least until the Supreme Court acts in the Fox case next year. If the Supremes decide that the FCC’s overall indecency policy runs afoul of the First Amendment, then presumably the FCC will drop any further appeal in the CBS case, as there will no longer be any indecency policy to enforce. But if the indecency policy somehow survives Fox’s constitutional challenge, the FCC might want to continue to slug it out with CBS on the non-constitutional issues.

So here we are, nearly eight years after Ms. Jackson’s 9/16 second exposure, with at least several months – and maybe a year or more – of additional litigation ahead. But for the foreseeable future, the broadcast interests (represented by Fox and CBS) appear to be in the driver’s seat. Let’s hope they stay there.

A grant of an “eligible entity” assignment application – along with the corresponding extension of the underlying permit – becomes final 40 days after public notice of the grant (barring any petition for reconsideration, application for review, or other intervention by the Commission on its own motion).

The court’s decision becomes effective when the court issues its “mandate” to the Commission, telling the Commission that the agency's got to comply with the court's decision. Under the Federal Rules of Appellate Procedure (Rule 41, if you’re checking), an appellate mandate is supposed to issue seven days after the deadline for seeking rehearing has passed or, if rehearing is sought, then seven days after rehearing is denied. The deadline for seeking rehearing is 45 days after the court’s opinion is issued. Note, however, that parties can also ask the court to hold off on issuing its mandate. The Third Circuit decision was issued on July 7 – which means that the deadline for seeking rehearing would ordinarily be August 21 and, if rehearing isn’t sought and the issuance of the mandate isn’t delayed, we can expect to see the mandate pop out on August 29 (August 28, technically the seventh day after August 21, being a Sunday).

Applying those concepts to the problem at hand, the Commission has come up with the following.

CP-extending “eligible entity” application grants that become final prior to the issuance of the Third Circuit’s mandate are safe – they will not be affected by the Third Circuit’s decision. This means that any such application whose grant showed up on a public notice issued at least 41 days prior to August 29 should be OK. (We do the math so you don’t have to: 41 days prior to August 29 is July 19.)

But any such grant that has not become final as of the issuance of the mandate has big problems.  In such cases, the expiration date of the construction permit at issue will automatically revert back to its original, non-extended date. If that non-extended date has already passed and the permit has, thus, expired, the staff will rescind the grant of the assignment application and dismiss the application (since, technically, there’s nothing left to assign). If the non-extended date has not yet passed, the grant of the assignment will remain in effect – but the assignee will be subject to the permit’s original construction deadline, and the likelihood of getting that deadline extended is negligible.

For any CP-extending “eligible entity” assignment application that hasn’t yet been acted on, the news is equally grim. Any such application involving a permit that has already expired will be summarily dismissed. If the permit hasn’t expired, the Commission will process the assignment, but the buyer will be getting the permit as is, without any extended construction deadline. Again, the likelihood of any such extension is negligible.

Is there any ray of hope here? If the Third Circuit’s mandate is delayed, presumably the Commission’s ax won’t start to fall right away, which could afford some valuable time in some instances. What are the prospects for such a delay? Who knows? The Third Circuit’s decision was expansive and, at least to some, controversial. It’s possible that some private parties, or maybe even the Commission, might be inclined to seek rehearing. That could delay the issuance of the mandate by several months, possibly affording relief to some. So, too, could an effort to bring the case to the Supreme Court (although that alone would not necessarily stay issuance of the mandate – a request to hold off on that issuance might need to be filed).

The Commission’s public notice does not address that delay possibility, presumably because the one thing we know for sure at this point is that, absent rehearing efforts, the rules provide for issuance of the mandate on August 29. And while the possibility of delay may exist in theory, it’s a very thin reed on which to rest any hopes.

So a policy designed to increase diversity in broadcast ownership is being deep-sixed by a court decision which complained of the lack of diversity in broadcast ownership. And so it goes.

Congress has ordered the FCC to review its ownership rules every four years. In 2002, the Commission (under then-Chairman Powell) started such a review. It was a highly contentious proceeding, with hundreds of thousands (if not millions) of comments filed and much rancorous debate inside and outside the Commission. The upshot was the 2003 Ownership Order. Under that order, the ownership rules generally were abandoned and replaced by a different set of limits (dubbed “Cross-Media Limits”) calculated through a “Diversity Index” applicable to all forms of media cross-ownership. 

Numerous appeals were filed, ending up in the Third Circuit, which promptly stayed the effectiveness of the 2003 Order. In 2004, the Third Circuit shipped a number of aspects of the 2003 Order back to the Commission for further consideration. The Court did agree with the Commission that a complete ban on newspaper/broadcast cross-ownership (in effect since 1975) was no longer necessary. BUT the Court concluded that the new cross-ownership limits as a whole had not been adequately supported by the Commission. So with the stay still in place (and with it, the pre-2003 rules), the Court remanded cross-ownership back to the Commission.

In 2006 the Commission started work on its next quadrennial ownership review. Since the Commission was then still looking at the 2003 rules thanks to the 2004 remand by the Third Circuit, the Commission folded that into its 2006 review. The end result was the 2008 Ownership Order. In that order the Commission ditched its 2003 Cross-Media Limits/Diversity Index approach, opting instead for its pre-2003 rules and standards relative to broadcast ownership. With respect to the NBCO rule, however, it chose not to revert to the pre-2003 absolute ban on newspaper/broadcast cross-ownership. Rather, the 2008 Order permitted such cross-ownership on a case-by-case basis, with a presumption that some limited cross-ownership would be permitted in the largest markets.

Many of the parties who appealed the 2003 Order also appealed the 2008 Order.

In its latest decision, the Third Circuit has again sent the NBCO rule back to the Commission. It’s not that the Court necessarily disagrees with the FCC’s case-by-case approach. The Court’s problem is with the process by which the Commission arrived at that approach: while the Commission had issued a notice of proposed rulemaking generally indicating that it planned to revisit the NBCO rule, the Court felt that that notice didn’t provide the public with enough of a description of the approach ultimately adopted. 

[Wonk Warning: Esoteric Legal Discussion Ahead. Proceed with Caution. This aspect of the Court’s ruling is particularly interesting to administrative lawyers. Agencies are required by the Administrative Procedure Act to describe “either the terms or substance of the proposed rule or description of the subjects and issues involved.” Ordinarily that requirement has not been interpreted to require the agency to spell out its proposals in exhaustive detail; to the contrary, many agency rulemaking actions that don’t conform to the specifics of the underlying notice of proposed rulemaking have been upheld as long as the actions were a “logical outgrowth” of the proposal. The Third Circuit’s rejection of the “logical outgrowth” doctrine here will provide fodder for law review articles and appellate arguments for some time to come.]

The Court’s dissatisfaction with the process leading to the 2008 NBCO rule may have been a reaction to the untidiness of that process. The FCC’s underlying NPRM plainly put everybody on notice that some change to the NBCO rule was on the table. But no specifics surfaced until then-Chairman Martin authored an op-ed piece in the New York Times disclosing what he personally had in mind. That piece appeared barely a month before the 2008 Ownership Order incorporating Martin’s approach was adopted. The Court seemed troubled by this chronology, even though the op-ed was accompanied by a simultaneous invitation for comments on Martin’s suggested NBCO rule. Further complicating matters were the facts that drafts of the 2008 Order were circulating before the comment period relative to Martin’s proposal wrapped up, and the final vote occurred just one week after the close of the comment period.

According to the Court, the FCC was obliged to (a) remain “open-minded” about the issues raised and (b) engage with the substantive responses submitted. As the Third Circuit saw it, the 2008 process fell short of those obligations, at least with respect to the NBCO rule. So back to the Commission goes the 2008 revision to the NBCO rule, with instructions to ensure that the APA is followed in any further revisions. As a result, the Commission’s outright ban on newspaper/broadcast cross-ownership, first adopted in 1975, is now back in force. 

Having sent the NBCO rule back, the Court next addressed the five permanent waivers of that rule that the Commission granted in the 2008 Ownership Order. Despite “several concerns” with these waivers, the Court has left them in place because the folks challenging the waivers in court hadn’t sought reconsideration of the waivers at the FCC first – so the Court doesn’t have jurisdiction to consider them on appeal. 

Despite its unhappiness with the NBCO aspect of the 2008 Order, the Court upheld the Commission’s decision to retain, essentially unmodified, its other primary media ownership rules: the radio/television cross-ownership rule; the local television ownership rule; the local radio ownership rule, including AM/FM subcaps; and the dual network rule. In a very brief discussion, the Court concluded that the FCC adequately justified the retention of each of these rules. Note, though, that these rules are essentially the same that were in effect prior to 2003.

The Court also rejected, almost in passing, constitutional challenges to the cross-ownership rules as a whole.  In particular, the Court adhered to the decades-old “scarcity doctrine” as a justification for broadcast regulation.  Despite the proliferation of new media voices in recent years, the Court concluded that the scarcity rationale – i.e., that “more people would like to access the [spectrum] than can be accommodated” – remains valid. As a result, the broadcast media continue to receive limited First Amendment protections.

Now, about that Diversity Order.

Back in 2004, when the Third Circuit remanded the 2003 Ownership Order, the Court devoted particular attention to what it described as the “the Commission’s obligation to make the broadcast spectrum available to all people ‘without discrimination on the basis of race.’” Among other things, the Court was critical of the FCC’s failure to address a number of minority-oriented proposals that had been advanced by the Minority Media and Telecommunications Council in 2002.

In response to that criticism, on the same day that it adopted the 2008 Ownership Order, the Commission also adopted the Diversity Order in which it adopted 13 proposals intended to enhance minority/female ownership opportunities.  So the Court should be happy, right?

Apparently not. Many of the Diversity Order’s enhanced opportunities were limited to “eligible entities” – a universe defined by reference to revenue factors.  Even though the race/gender-neutral universe of “eligible entities” might logically include a significant number of minorities and women, the Third Circuit rejected rule changes based on that definition of “eligible entities”. According to the Court, the Commission had made no showing that expanding opportunities for “eligible entities” would expand opportunities for women and minorities. The Court is insisting that the Commission explain why it should use the revenue-based “eligible entities” definition rather than a “socially and economically disadvantaged business” (SDB) definition that might “better promote the Commission's diversity objectives”.

In its 2004 decision the Court had directed the Commission to consider SDB-based regulations in its 2006 quadrennial ownership review (i.e., the proceeding that culminated with the 2008 Ownership Order). The Commission, however, did not do so, opting instead to rely on the “eligible entity” approach. 

But that wasn’t good enough for the Court, which has now concluded that the FCC hasn’t explained how a revenue-based “eligible entity” definition would increase female and minority ownership. (In part, the Court noted that this failure stems from the fact that the Commission simply doesn’t have any reliable data on female and minority ownership, although the Court acknowledges that the Commission is working to address that problem.)

So the Court has vacated and shipped back to the FCC all of the Diversity Order’s provisions based on the “eligible entity” definition. (Still alive and kicking are the Diversity Order provisions that don’t hinge on “eligible entity” status – i.e., the ban on discrimination in broadcast transactions; the “zero tolerance” policy for ownership fraud; non-discrimination provisions in advertising sales contracts; longitudinal research on minority and women ownership trends; local and regional bank participation in SBA guaranteed loan programs; “Access to Capital” conference; and guidebook on diversity.)

The tossing of the “eligible entity”-dependent provisions may place the FCC in an awkward position. A number of “eligible entities” who happen to be minority and/or female have been taking advantage of those provisions for some time, and have applications in the pipeline to continue to do so. The Third Circuit’s decision would appear to put the kibosh on such applications – even though tossing such applications would also appear to be contrary to the Court’s underlying goal. Whether the Commission can come up with a way to save the baby from getting thrown out with the bathwater remains to be seen.

It also remains to be seen how the Court’s insistence on explicit consideration of racial and gender factors can be squared with the Supreme Court’s case law on affirmative action. The Supreme Court did uphold (21 years ago) some earlier FCC policies on minority ownership in the face of an equal protection constitutional attack. But that decision was expressly overruled by the Supremes in Adarand, which imposed very heavy burdens on any federal agency attempting to justify race-based decision making. The Third Circuit acknowledges Adarand but seems to insist that the FCC can and should nonetheless consider race and gender in its licensing policies. At the least, according to the Court, the FCC must do more than cite the difficulty of complying with Adarand in deciding not to consider race and gender factors. Reliance on the race/gender-neutral concept of “eligible entity” was designed to get the Commission around Adarand problems. It will be interesting to see how this issue will now evolve.

Had the Commission chosen not to take the cases up to the Supremes, the Commission would have been unable to continue those efforts without first radically revising its regulatory approach. (The alternative, of course, would have been simply to walk away from indecency enforcement entirely – an alternative that was, obviously, not the Commission’s first choice.) Such a radical revision would have sucked the Commission back into the regulatory and constitutional quagmire of indecency regulation that has existed for nearly four decades since the Supreme Court’s seminal decision in Pacifica (often referred to as “the seven dirty words” case).

So the Commission is going with a Hail Mary to the Supreme Court, apparently hoping that the Supremes will tell the Second Circuit that its Fox and NYPD Blue rulings were wrong.

We won’t get deeply into the specifics of the FCC’s arguments to the Supreme Court here. Since the next act of the indecency soap opera could play out over the next year or so, there should be plenty of time for that down the line. But here are a few things to know that might help you appreciate the drama as it unfolds.

First, even though the FCC has asked the Supremes to review the Second Circuit decisions, there’s no guarantee that that request will be granted. Unlike the federal circuit courts of appeal, the Supreme Court is not (except in very, very rare instances, and this isn’t one of them) required to take cases just because one of the litigants asks it to.

A party wanting the Supremes to consider its case files a petition explaining why the issues in the case are important enough to warrant the Court’s attention. (Want to impress your lawyer friends? The technical name for such a petition is “petition for certiorari” – that last word generally, but not invariably, being pronounced “sur-she-or-RARE-eye”. You can also short-hand it as “cert petition”, where “cert” is pronounced like the candy/breath mint.) The Supreme Court rules describe the types of issues that might get you in the door. Essentially, they’re looking for cases involving some “important federal question”, particularly if the lower court has decided that question in a way that conflicts with decisions by the Supreme Court or other courts of appeals.

In its petition (which was co-signed by the Solicitor General, as is customary but not mandatory in such cases), the Commission argues that the Second Circuit’s decisions conflict with the Supreme Court’s 1978 Pacifica decision and a couple of 1990s-era indecency decisions out of the D.C. Circuit. The Commission also claims that the Second Circuit’s “vagueness” analysis was inconsistent with a 2010 Supreme Court decision. And finally, the Commission asserts that, if the Second Circuit rulings remain in effect, the Commission will be unable to do what Congress has told it to do, i.e., enforce the statutory prohibition against the broadcast of indecent material.

The next step in the process will be the filing of oppositions to, and/or statements in support of, the FCC’s cert petition. Oppositions are due within 30 days of the FCC’s filing (i.e., by May 23), unless the time gets extended. Once oppositions are filed, the Court will hunker down, read through the pleadings, and decide whether to take the case. Since the Supreme Court’s annual term traditionally wraps up by the end of June or early July, it’s obviously too late to get the case briefed and argued this term, but there’s at least a chance that the Court might rule, before it closes up shop this summer, on whether or not it will hear the case next term.

If the Court denies the Commission’s petition, that’s just about all she wrote – the Second Circuit decisions will then stand and, if the FCC’s petition is accurate, the Commission will be “preclude[d] . . . from effectively implementing statutory restrictions on broadcast indecency”. If the Court grants the petition, it will set a briefing and argument schedule that would probably call for arguments sometime this Fall. In that case we’d be looking for a decision on the merits from the Court by the end of the term, i.e., by July, 2012.

Oddsmakers usually don’t give cert petitions much chance. The Court gets lots of them, but ends up granting only a tiny percentage. This case may be different, though. The Fox case has already been to the Supremes once, which suggests that the Court may have an interest in taking a look at the constitutionality of indecency regulations. That is, after all, a question which the Court has not revisited in more than 30 years. (On its first trip to the high court in 2009, the Fox case was resolved on non-constitutional grounds, which set the table for the Second Circuit to issue a ruling on constitutional grounds, leading to the current state of affairs.)

That’s the good news for the Commission.

The bad news is that, if the Court does take the case, the Commission may find the Court interested in significantly more than mere indecency. As one of my fellow bloggers observed last year,

in his separate opinion in the Supreme Court’s 2009 Fox decision, Justice Thomas specifically invited reconsideration not only of Pacifica, but also of Red Lion. Red Lion is the 1969 Supreme Court decision upholding the Fairness Doctrine (and, by implication, special regulatory treatment for broadcasting) because of the supposed “scarcity” of broadcast spectrum. Thomas referred in particular to the “questionable viability” of both Red Lion and Pacifica. If four of his colleagues were to agree with Thomas that the scarcity rationale is no longer valid, that could cause massive upheaval in virtually every aspect of the FCC’s operation. 

So there is at least some basis for thinking that the Court could see this case as an opportunity to review the continued viability of the “scarcity rationale” which forms the historical foundation of much of the FCC’s regulation of broadcasting. If that were to happen, it’s at least conceivable that the Commission could lose not only its ability to regulate indecency, but its ability to regulate broadcasting as it has for decades.

So the stakes could definitely be high for all concerned. We’ll keep you updated on the action as it goes down.

ABC appealed the action to the Second Circuit, which had in 2007 invalidated the Commission’s indecency policy on non-constitutional grounds in the Fox case. Action on the ABC appeal was put on hold while the Fox case headed to the Supreme Court (in 2008) only to get bounced back to the Second Circuit (in 2009), which then held the policy to be unconstitutional in July of last year. (The FCC asked the Second Circuit to reconsider its Fox decision, but the Court declined the opportunity, as most of us expected it would.)

In pleadings filed in the ABC case, the FCC acknowledged that the 2010 Fox decision “invalidated the [FCC]’s indecency policy in its entirety.”  That is, there was nothing left of the indecency policy after Fox. And while there may be some arguable factual distinctions between the Fox case and the ABC case – for example, Fox involved mere unscripted language, while NYPD Blue involved “scripted nudity” – the FCC effectively conceded that those were immaterial because the legal principle announced in the Fox case didn’t depend on any particular factual distinctions. (For what it’s worth, the ABC Court expressly rejected the notion that there were in fact any significant distinctions between Fox and ABC.)

Since the ABC case involved the FCC’s application of its indecency policy, and since that policy had already been held to be unconstitutional (in the Fox case), the Second Circuit had little difficulty in concluding that the NYPD Blue fine should be vacated.

According to a brief notation in the decision, the Summary Order does not have any “precedential” effect, which means that the ABC decision itself will not be binding on the Court in any other cases that may arise. But that probably doesn’t make much difference, because it’s clear that Fox is binding. And given the ABC panel’s emphatic affirmation of the broad reach of the Fox decision, the FCC should not expect any different result out of the Second Circuit any time soon. So while the ABC decision may not add any new dimension to the indecency debate, it certainly suggests that the Second Circuit remains solidly committed to the rationale set out in Fox.

Where do we go from here? There are now three separate cases – Fox, ABC and CBS’s continuing saga relative to the Janet Jackson/Super Bowl matter – that could go to the Supreme Court sooner rather than later. Fox and CBS are not quite yet teed up to go straight to the Supremes, and in view of its total reliance on Fox, it seems unlikely that the FCC would attempt to take ABC up by itself. Whether the issue of the FCC’s indecency policy is ultimately brought back to the Supreme Court – and, if it is, whether the Supremes will agree to look at it – is anybody’s guess. But if the issue does make it up there, we could end up with a decision that fundamentally changes FCC jurisprudence as we have known it for decades: not just the law of indecency, but the extent to which the FCC may permissibly regulate any broadcast content.

Stay tuned.

[Blogmeister's Note: This post has been updated to reflect that the Second Circuit denied the FCC's petition for rehearing (on November 22, 2010).  The decision was largely unpublicized and unreported, and we found out about it only through our old friend Andy Schwartzman, who kindly brought it to our attention.]

Since DE status is supposed to be reserved for the Little Guy (relatively speaking), the Commission wanted to prevent Big Guys from using corporate sleight of hand to try to garner undeserved DE status. [We say “relatively speaking” because we’re not really talking about mom-and-pop operations here: the smallest companies entitled to the largest bidding credit are those with no more than $3 million in average revenues over the three years preceding the auction. Even companies with annual gross revenues of up to $40 million are entitled to the low-end DE 15% credit.] The Commission uses various attribution mechanisms to discourage such folderol. Several such mechanisms, adopted in 2006, were the target of the recent Third Circuit appeal.

The targeted provisions (which appear in Sections 1.2110 and 1.2111 of the FCC’s rules) included:

The 25% Attribution Rule, which provides that a bidder’s DE status depends not only on its own revenues, but also on those of any other single entity which happens to lease or resell 25% or more of the bidder’s spectrum capacity.

The 50% Impermissible Relationship Rule, which renders licensees ineligible for DE status if they lease or resell (including at wholesale) more than 50% of their spectrum capacity. So, for example, if a concededly “small” (by any measure) bidder elected to lease 5.1% of its capacity to each of 10 other concededly “small” entities, the bidder would be absolutely barred from DE status.

The 10-Year Repayment Schedule, which kicks in if a successful bidder, having used DE-based bidding credits, happens to lose its DE eligibility at some point after the auction. As the name implies, this provision calls for repayment of the bidding credit amount if DE eligibility is lost. The 2006 amendment of the rules extended the time, from five to 10 years, during which loss of eligibility would trigger repayment. (Full repayment of credits is required if eligibility is lost in the first five years after the auction; the percentage required to be re-paid then decreases over the next five years.) Importantly, the new time frame would apply to DE eligibility arising not only from the newly-adopted rules, but also from previously-established DE standards.

These new rules imposed significantly greater limits on DE wannabes. Accordingly, a number of DE-related entities – an investor in DEs, a small wireless carrier owned by Alaskan natives, a trade group representing minority-owned telecom companies – asked the Third Circuit to take a look at the FCC’s proceedings that resulted in the adoption of the rules.

The Court concluded that the 25% Attribution Rule was OK. According to the Court, the new rule was properly within the scope of the FCC’s rulemaking proceeding (that is, anyone interested in that proceeding could have reasonably guessed that the FCC might adopt the 25% Attribution Rule, or at least something like it). Even though the rule does have a damping effect on the ability of DEs to secure financing, and even though the Commission barely even alluded to the likely adverse effects of the rule on DEs, and even though the Court felt the lack of any supporting findings made this a “close question”, the Court ultimately deferred to the agency and let this one slide.

Not so with respect to the other two rules. 

As the Third Circuit read the record, the FCC hadn’t bothered even to suggest, much less formally propose, the gist of what became the 50% Impermissible Relationship Rule. For decades, however, the Administrative Procedure Act has provided that, before an agency can impose new rules, it must afford reasonable notice and an opportunity to comment on them. Since the Commission hadn’t done so here, the 50% Impermissible Relationship Rule was toast. 

Because the Court tossed that rule on procedural grounds, the Court didn’t have to address the rule’s substantive shortcomings in that rule which had been called to the Court’s attention by the petitioners. But the Court did take the opportunity, in a footnote, to “commend . . . to the Commission’s attention on remand” a number of questions about the rationale supposedly underlying the rule.

With respect to the 10-Year Repayment Schedule, the Court reached a similar conclusion. While the Commission had indicated in its initial proposals that a new repayment schedule might apply to any new eligibility criteria it might adopt, the Commission never let on that that new schedule could also apply to existing criteria. That lack of notice was fatal here. Accordingly, the Court sent the new schedule back to the Commission for further consideration. Again, though, the Court inserted a footnote in which it raised serious questions about the validity of the FCC’s analysis of this issue and, again, “commended” the issue to the FCC’s attention on remand.

The real drama in this case was not in the Court’s analysis of the arguments above. Rather, it was in the practical issue that confronted the Court once that analysis had been completed. Back in 2006, having rushed through the new DE eligibility rules, the Commission conducted the wireless auction pursuant to those rules. But now that, in 2010, two of those rules have been vacated by the Third Circuit, what should be done about the 2006 auction. That auction was, after all, conducted pursuant to rules which have now been declared invalid. Doesn’t that mean that the auction should be rescinded?

That’s what the petitioners urged. They stopped short of urging rescission of all other intervening auctions which have been conducted subject to the DE rules adopted in 2006. . . BUT the petitioners did note that, logically, those other auctions would be equally subject to rescission.

Not surprisingly, the FCC – joined by at least some of the winners in the 2006 auction – “vigorously” opposed touching the results of the auction. And in an apparent triumph for the tried-and-true 21st Century precept of “Too Big To Fail”, the Court sided with the Commission.

In the Court’s view, rescinding the auction

would involve unwinding transactions worth more than $30 billion, upsetting what are likely billions of dollars of additional investments made in reliance on the results, and seriously disrupting existing or planned wireless service for untold numbers of customers. Moreover, the possibility of such large-scale disruption in wireless communications would have broad negative implications for the public interest in general.

So the auction results will not be upset, but the FCC is still left with the chore of revisiting its DE provisions. The Commission hasn’t announced how it plans to proceed with that chore, but in the meantime, the 50% Impermissible Relationship Test and the 10-Year Repayment Schedule have been vacated, and the previous version of Section 1.2111(d)(2) of the rules – i.e., the section which contains the repayment schedule provision – is to be reinstated until further notice.

As the FCC sees it, the Second Circuit panel should have focused narrowly on the particular facts of the case before it and should have assessed the FCC’s analysis of those facts, nothing more and nothing less. Instead, at least according to the Commission, the panel considered other facts and circumstances involving other cases to reach its conclusion that the overall indecency policy – not merely that policy as applied to the Fox facts – was too vague. But, the Commission argues, there is nothing vague about the notion that “fuck” and “shit” – the words uttered by Cher and Nicole Richie in the Fox broadcasts at issue – are indecent; accordingly, even if there might be some question about whether other material might or might not be deemed “indecent”, the same cannot be said of the particular material before the court.

The Commission gussies up this argument with a discussion of the standards for when a rule is “vague” as a constitutional matter, although that discussion includes, at most, only passing mention of the different “overbreadth” standard often used in First Amendment cases.  Suffice it to say that, whatever the other merits of the Commission’s argument on this point, it presupposes that the language at issue here was, in fact, “indecent”.  But since the Commission had determined in at least two cases more or less contemporaneous with its decision in the Fox case that similar language was not indecent, that assumption is obviously open to question.

The Commission also characterizes the panel’s decision as effectively rejecting the “contextual” approach which the FCC says it has taken to indecency enforcement. Other courts – including the Supremes in the Mother of All Indecency Cases, Pacifica, not to mention at least one other Second Circuit panel – have repeatedly emphasized the need for the Commission to consider “context”. Thus, the Commission argues, the Fox panel’s seeming rejection of that approach should be reviewed and reversed as inconsistent with precedent.

The problem with this aspect of the FCC’s argument is that it’s not entirely clear that the panel rejected the importance of “context” as the FCC claims. Rather, the panel appears to have been critical not of the need to consider “context”, but rather of the FCC’s less than clear – opaque, some might say – approach to how “context” is considered. While the Commission undeniably incants the term “context” in its indecency opinions, that incantation often appears to be little more than the legalistic equivalent of “abracadabra”, a rhetorical flourish with no apparent meaning or substance.

As one example – cited by the Second Circuit panel – the Commission’s contextual analysis enabled it to reach diametrically inconsistent conclusions about the use of the term “bullshitter” in a single instance, each time citing an identical contextual aspect. First, the fact that that word was aired during a news interview made it indecent; but on further thought, the Commission concluded that, because it was aired during a news interview, it wasn’t indecent. In the panel’s words, if the Commission does have any actual indecency standard, it is a standard that “even the FCC cannot articulate or apply consistently.”

The Commission’s final argument is one of apparent exasperation. As it reads the panel decision, the Commission can’t win because any changes to make its contextual analysis more predictable would raise further First Amendment concerns, subjecting the FCC to a Catch-22.

This argument is intriguing because, by making it, the Commission could be seen as conceding that, as a practical matter, indecency is not susceptible to regulation within constitutional limitations. To be sure, the Supreme Court in Pacifica held that the Constitution does permit some regulation of broadcast indecency. But the Supremes then left it to the Commission and the courts to develop, on a case-by-case basis, an appropriate analytical approach in which “context” would be all-important. If, after more than 30 years, the best that the FCC has been able to come up with is the “analysis” invoked in Fox, is it possible that the agency is incapable of regulating indecency – beyond the Carlin monologue at issue in Pacifica – constitutionally? The FCC’s rehearing petition seems to imply that.

The Second Circuit now must decide whether or not to grant rehearing, either by the original panel or en banc. While that may sound simple, it’s not. In particular, the en banc rehearing process in the federal courts ranks up there with papal elections when it comes to procedural quirks. The FCC’s petition will first be circulated to all ten active judges on the Circuit as well as Senior Judge Leval, who sat on the original panel. Any of those 11 can ask that his/her colleagues be polled as to whether or not to consider the petition. If nobody asks for such a polling, the petition is denied. If polling is requested, then the ten active judges – but no senior judges (i.e., Judge Leval doesn’t participate) – are polled. Unless a majority of those polled vote for rehearing, the petition is denied. If a majority of the poll votes to grant rehearing, then the case is re-briefed and re-argued in front of all ten active judges and Senior Judge Leval. There is no guarantee that, even if the case gets that far, the FCC would prevail. A majority of the en banc court could just as easily affirm the panel’s decision.

In other words, the FCC has a long row to hoe.

Meanwhile, a couple of other indecency cases also continue to wend their way through the Courts.

A separate panel of three judges in the Second Circuit is currently considering an appeal of the FCC decision that the broadcast of “naked buttocks” during an episode of NYPD Blue was indecent. After the Fox decision came down in July, the NYPD Blue panel asked the parties for supplemental briefs discussing the impact of Fox on the NYPD Blue case. The FCC’s terse, four page, brief noted the Commission’s belief that the facts of the NYPD Blue broadcast, which involved the scripted display of adult nudity, were very different from those at issue in Fox, which involved the utterance of unscripted “fleeting expletives”. Nevertheless, the Commission conceded that the agency’s decisions in both Fox and NYPD Blue were based on the same “contextual framework” that the Court found unconstitutional in Fox. According to the Commission, the Court’s Fox opinion therefore “appears to suggest” that the policy would be unconstitutional as applied to the NYPD Blue case as well.

As a result, the Commission suggests that the NYPD Blue appeal be put on hold until after resolution of any rehearing motion (the Commission’s NYPD Blue supplemental brief was filed several days before the Fox petition for rehearing went in). With both cases pending in the same court, it seems likely that there will not be any decision in the NYPD Blue case until the Fox rehearing request is disposed of.

And just down the road in Philadelphia, the Third Circuit is also dealing with indecency in CBS’s appeal of the Commission’s Janet Jackson/Super Bowl decision. As we reported in the April issue of our Memo to Clients, the Third Circuit, after hearing oral arguments early this year, asked for supplemental briefs on issues that could allow the court to resolve the case without addressing the constitutional questions regarding the FCC’s indecency policies. While the Third Circuit does not appear to have asked the parties to discuss the possible effect of Fox on the Janet Jackson case, CBS (the appellant) did notify the court of the issuance of Fox decision, thus suggesting that the Second Circuit’s decision was at least relevant to the Third Circuit’s deliberations. The FCC responded with a two-page letter in which it observed that the Third Circuit is not bound to follow Second Circuit decisions and that, anyway, the Second Circuit decision is flawed, and, by the way, the Third Circuit is still considering issues that might allow it to resolve the Janet Jackson case on non-constitutional grounds.

While the sparring before the various circuits is important and could prove decisive, the real question is whether – and if so, when – we’ll ever get to the Main Event. That would be review by the Supreme Court of the constitutionality of the FCC’s indecency enforcement policy as it has developed since Pacifica. Such review could have implications for the FCC’s authority far beyond the somewhat narrow issue of indecency. With the FCC’s election to seek rehearing of Fox at the Second Circuit (rather than ask the Supremes to take a look at the case), that Main Event has been deferred at least a year or two.

Frankly, I don’t see much change from Stevens. It’s pretty safe to say that the “liberal block” of the Court will affirm the Second Circuit and strike down the FCC’s regulatory scheme. (That would parallel the vote in the 1978 Pacifica case, where the four liberal survivors from the Warren Court hung together in dissent.)  Let’s also assume that Justice-designate Kagan will: (a) be confirmed and (b) vote the same way that Justice Stevens did in Stevens (no relation, obviously). So right there you’ve got Breyer, Ginsbug, Sotomayor and Kagan ready to slap the FCC down.

I think Fox also gets Justice Thomas. He was the only Justice in the 2009 Fox decision to flat out question the rationale for broadcast content regulation. His separate opinion there indicated that he’s itching to do away not only with the indecency regulations, but also with the scarcity doctrine underpinning all regulation of broadcast content.  Plus, he voted with the majority in Stevens.  And don’t forget his vote in U.S. v. Playboy Entertainment Group, Inc.  There the Court struck down a requirement that cable operators scramble sexually explicit content.  He voted with the majority, saying “I am unwilling to corrupt the First Amendment to reach this result. The ‘starch’ in our constitutional standards cannot be sacrificed to accommodate the enforcement choices of the Government.”

On the other side, I suspect that Justice Alito is the most likely to vote to reverse the Second Circuit and side with the FCC.  He was the lone outlier in Stevens and has generally seemed to be paternalistic and protective of “society’s morals” in similar cases.

That gets us to 5-1, with Chief Justice Roberts and Justices Scalia and Kennedy left. I think you might see one, maybe  two, of them side with the FCC, but not all three.   Why?

Chief Justice Roberts wrote the strong majority opinion in Stevens and was clearly uncomfortable with the lack of regulatory precision in that case.  While it’s possible that he could line up with Alito, I just don’t see it. After all, the Chief was also in the majority in the most controversial First Amendment decision of the most recent term (Citizens United v. Federal Election Commission). There is really no comparison between Fox and Citizens United, but if the Chief is going to go that far out on a limb in favor of the First Amendment, it's going to take him a while to get back in, even if he really wants to come back.

Speaking of Citizens United, that decision was written by Justice Kennedy.  He was also in the majority in Reno v. ACLU and wrote the opinion in the U.S. v. Playboy.

I originally had Scalia solidly on Fox’s side, but I began to rethink this a little. He wrote majority decision in 2009, when Fox first blew through the Court and the FCC won. (As you will recall, the Court then sent the case back down on administrative law grounds without reach the thornier constitutional issues.) But that doesn’t say much: he was very clear that he was ruling on the non-constitutional issues only, and he never hinted at how he might come out on the First Amendment issue here. Some of his votes in other First Amendment cases suggest he might side with Fox here. Remember, Scalia was the swing vote (joining uber-liberal Justices Brennan and Marshall) in Texas v. Johnson, which accorded First Amendment protection to flag burning. He was also clearly with the majority in Stevens.

On the other side, he’s shown that he is willing to “vote morality”. In Barnes v. Glen Theater he concluded that the First Amendment did not prevent restriction of nude dancing.   He also dissented in U.S. v. Playboy Entertainment Group, Inc.  Ultimately, I’m hoping that he’ll vote to strike down the FCC’s indecency scheme because: (1) he justified the moral high ground in Barnes only after declaring nude dancing to be conduct, not expression; (2) he dissented in Playboy only after deciding that the content providers in that case were clearly providing – and intending to provide – hard core sexually-oriented material, not at all the case here; and (3) he was in the majority in Reno v. ACLU back in 1997 where regulation of supposedly “harmful” material on the Internet was declared unconstitutional, in part due to the vagueness of the law.

So maybe more than one of Scalia/Roberts/Kennedy drops off to join Alito in upholding the FCC’s indecency policy.  But I doubt it. And in any event, I clearly don’t think any more than those three join Alito in ruling for the FCC. 

Bottom line: Kevin’s Krystal Ball says that Fox wins in the Supremes.

Clouding the FCC’s choices is the fact that CBS’s appeal in the Janet Jackson case is currently pending in the U.S. Court of Appeals for the Third Circuit. Since that case also involves the indecency policy so thoroughly trashed by the Second Circuit in Fox, the Commission might be inclined to hold off until the Third Circuit shows its hand before making any decisions about the next appellate step through the indecency minefield. (The FCC has 90 days to file its cert petition – and that can be extended another 60 days under some circumstances – so the Commission may sit back and wait at least a little while for a Third Circuit decision to roll in.)

[Blogmeister’s Note: Kevin Goldberg, our crack Supreme Court observer and First Amendment guru, has advised that, according to Kevin’s Krystal Ball, the Second Circuit’s decision would be affirmed in the Supreme Court by at least 6-3, maybe even 7-2, if it were to get that far. Kevin has undertaken considerable analysis to back this up – let us know if you would like us to post that analysis – and he assures us that he is not relying on the soccer-predicting German octopus. Some reports, however, indicate that he has his own octopus powering the Krystal Ball (see illustration at right).]

Of course, the Commission could also just run up the white flag and forget about appealing any further. In that case, its indecency options would be reduced to two: (1) go back to the drawing board and attempt to develop an indecency enforcement policy that passes constitutional muster; or (2) accept the fact that indecency is not susceptible to government regulation.

In view of the zeal with which the FCC has been flexing its anti-indecency muscles in recent years, (2) seems an unlikely choice. That unlikelihood is underscored by Commissioner Copps’s statement concerning the Second Circuit decision. In that statement Copps expressed his hope that the FCC would appeal the case, and he called on the Commission to “move forward immediately to clarify and strengthen its indecency framework”. Hmm . . . we’re guessing that he would opt for choice (1). 

But so far Copps is the only Commissioner who has spoken up on this. Others might reasonably take the position that now would be a good time for the Commission to get out of the business of trying to regulate indecency. This is particularly so since the FCC could claim that such a retreat was strictly a reaction to the Second Circuit’s decision. That is, if any critics tried to beat up on the Commission for giving up too early, the Commissioners could simply respond that the Court made them do it.

While the FCC plans out its next move on the litigation front, what about all those indecency complaint proceedings which have been piling up at the Commission over the last several years?

The good news is that, in the aftermath of the Fox decision, it seems very unlikely that the FCC would attempt to take any enforcement action based on pending complaints. After all, the Second Circuit told the FCC in no uncertain terms that the Commission’s indecency policy is unconstitutional. With the Second Circuit’s order sitting there, the Commission seems to have no choice but to stand down unless/until that order is reversed. So don’t expect to see any more fines or forfeitures or notices of apparent liability or even letters of inquiry relating to allegations of indecency while the Second Circuit’s Fox decision is alive and kicking. 

And similarly, anyone who is already in the middle of an indecency inquiry – say, for example, every Fox affiliate who received the American Dad inquiry – is probably off the hook for responding to the FCC’s questions.  (The Commission could theoretically ask the Second Circuit to stay the effectiveness of its order. The odds that such a request might be granted fall comfortably in the “good luck with that” range.)

Ironically, the FCC’s likely inaction on pending complaints is bad news as well. Lack of FCC action would mean that all the stations whose license renewals have been held up for years solely because of pending indecency complaints would probably not see those renewals granted in the short term. That’s frustrating: once a court has determined that an agency is acting unconstitutionally, regulatees who have suffered and are continuing to suffer from such unconstitutional activity should logically be entitled to prompt relief. While it would be nice if the Commission were to do the right thing here, you probably shouldn’t count on that happening. Pending applications are likely to remain pending.

The Commission could clear up any uncertainty about all these things by issuing a public notice setting forth its plans. If that happens, we’ll let you know. In the meantime it would probably be advisable not to hold your breath.

Acknowledging that the Supreme Court (in the 1978 Pacifica case) had clearly held that the Constitution permits some regulation of indecency, the Second Circuit observes that the media landscape has changed dramatically in the 30 years since Pacifica. The overwhelming penetration level of cable and satellite services and the development of an “omnipresent” Internet offering all sorts of video programming starkly contrast with the state of affairs in 1978, when broadcast media occupied a “uniquely pervasive presence in the lives of all Americans”. The Circuit also notes the technological controls now available to help parents police content in their own homes.

But even within the confines of Pacifica, the Second Circuit concludes that the FCC’s policy on indecent broadcasts exceeds Constitutional limits because the policy is impermissibly vague. 

Significantly, the Circuit’s ruling targets the FCC’s entire indecency standard – not just the “fleeting expletives” component that was the focus of its 2007 opinion. 

In a tour de force of First Amendment analysis, the Second Circuit takes apart virtually every element of the FCC’s policy and the FCC’s defense of that policy. The Circuit finds that the standard itself is so vague that neither the broadcast industry nor the FCC itself could ever be certain which words or images qualify as “patently offensive” under the existing standard. The Court also observes that the FCC’s presumptive prohibition against the words “shit” and “fuck” can’t survive because the FCC can’t justify why some uses of those words have been prohibited and some not.

For example, how could the FCC permit the broadcast of repeated uses of certain “bad” words by fictional soldiers in Saving Private Ryan, but proscribe the use of those same words by real life musicians in a documentary about the blues? The Commission has on occasion attempted to explain its actions on the basis of such factors as whether the words are “integral” to a particular program or whether the program is a “bona fide news interview”. But in the Circuit’s view, “[t]here is little rhyme or reason to these decisions”.

The Second Circuit describes the enormous First Amendment harms that naturally flow from “the FCC’s indiscernible standards”. The Court notes the inherent risk that vague standards applied on an “ad hoc” basis by government officials allows for the suppression of particular points of view: “it is hard not to speculate that the FCC was simply more comfortable with the themes in ‘Saving Private Ryan,’ a mainstream movie with a familiar cultural milieu, than it was with ‘The Blues,’ which largely profiled an outsider genre of musical experience.” 

The Circuit also recognizes that the FCC’s vague standards force broadcasters to choose between (a) censoring controversial programs and (b) risking massive fines or loss of licenses – the unsurprising result being that many broadcasters choose to self-censor. According to the Court, concern about possible FCC enforcement efforts has prompted stations to edit or refuse to air a wide range of programming, including a documentary on the September 11th World Trade Center attack, literary readings, live news programs, political debates, sitcoms and dramatic programs. 

And with that, the Second Circuit has struck down the FCC’s indecency policy. While the Court acknowledges that, unless and until Pacifica is overruled, the FCC could conceivably create a constitutional policy, the agency’s current policy does not pass Constitutional muster.

The Second Circuit’s decision represents an unambiguous defeat of the FCC’s current indecency policy – but it’s not likely the last word on the subject. The FCC will almost certainly appeal to the Supreme Court. And let’s not forget that the Third Circuit still has the Janet Jackson Super Bowl case pending – raising the possibility of conflicting decisions between the two federal courts. Such a “circuit split” would virtually guarantee a Supreme Court review. 

The prospect of Supreme Court review focusing on the constitutionality of indecency regulation is particularly exciting because, in his separate opinion in the Supreme Court’s 2009 Fox decision, Justice Thomas specifically invited reconsideration not only of Pacifica, but also of Red Lion. Red Lion is the 1969 Supreme Court decision upholding the Fairness Doctrine (and, by implication, special regulatory treatment for broadcasting) because of the supposed “scarcity” of broadcast spectrum. Thomas referred in particular to the “questionable viability” of both Red Lion and Pacifica. If four of his colleagues were to agree with Thomas that the scarcity rationale is no longer valid, that could cause massive upheaval in virtually every aspect of the FCC’s operation. 

In the meantime, broadcasters should not take the decision as a green light to start airing “R” rated movies at mid-day. The Second Circuit struck down the FCC’s policy interpreting the federal statute prohibiting “obscene, indecent or profane language” but not the statute itself. In other words, it’s still technically illegal to broadcast such fare, even if there is no obvious way in which the government could penalize it in the wake of the Second Circuit’s decision. As has always been the case, broadcasters will need to continue to exercise good judgment in their selection of programming. We, as always, will stay tuned.

When the Second Circuit gave the FCC the big thumbs down in 2007, its opinion was not limited to the relatively narrow non-constitutional law question on which the case was ultimately decided. Rather, the court took the somewhat unorthodox step of offering a detailed analysis of the constitutionality of the FCC’s indecency policy, an analysis which brutally ripped that policy apart. The constitutional analysis was what lawyers refer to as “dicta” – meaning that it technically wasn’t an essential aspect of the court’s holding, and so had no precedential impact. Still, that analysis clearly telegraphed what the Second Circuit thought of the FCC’s policy, constitutionally speaking.

So when the Supremes sent the case back to the Second Circuit (the logical expectation being that the parties would re-address the constitutional issue), the likely outcome of that second visit to the Second Circuit was anticipated to be a foregone conclusion. 

And after the January 13 oral argument, it’s looking like that foregone conclusion is a pretty good bet: many observers expect that the Second Circuit will hold the “fleeting expletives” to be unconstitutional.  (You don't have to trust us on this one -- the oral argument is available on-line for your viewing enjoyment.) 

The issue most troubling to the Second Circuit this time around appeared to be the FCC’s failure to provide a coherent and specific standard as to when something was indecent. One judge characterized the Commission’s indecency decisions since the Supreme Court’s 1978 Pacifica decision as a matter of “bewildering vagueness”. The Second Circuit panel peppered FCC counsel with hypothetical programs they worried might be found indecent under the current regime. For instance, Judge Leval (the source of the “bewildering vagueness” characterization) asked whether a production of Hamlet might be found indecent, and Judge Hall queried whether a news report on Wednesday’s oral arguments would be allowed to include the original uncensored clips from the 2002 and 2003 broadcasts.  

The FCC’s counsel suggested in response that both of those examples would probably not be found held indecent, noting that the Commission “bends over backwards” to protect news programs and editorial decisions. The Court, reflecting apparent skepticism, asked pointedly whether the First Amendment allows it to rely on an agency’s promise to “bend over backwards.”  

Counsel for Fox (and NBC and CBS, who participated as intervenors), as well as the judges, also expressed some concern over the impact of the FCC’s enforcement policy on smaller local broadcasters. The limited resources of small broadcasters, the argument went, might prevent them from implementing a delay system – and, without that safety net, the threat of enhanced penalties could lead them to self-censor their broadcasts, and particularly their news coverage. The court seemed unconvinced (as Justice Scalia seemed to suggest in his opinion) that this concern might be alleviated because folks living in smaller towns were less likely (at least according to Scalia) than “foul-mouthed glitteratae from Hollywood” to use such expletives. 

The Court and FCC counsel also parted ways on whether the Supreme Court’s decision in Pacifica governs the current case. The FCC clung to that decision, claiming that Pacifica’s approval of indecency regulation, combined with the FCC’s (supposed) guidance since then about what is and is not indecent, foreclosed the argument that the current regime was unconstitutionally vague. The Second Circuit strongly disagreed, with Judge Leval at one point telling the FCC to “stop telling us Pacifica ruled on this – it didn’t,” and advising Commission counsel that if he didn’t think the Pacifica decision was extremely narrow, he needed to read it again. Judge Leval explained that whereas Pacifica narrowly approved of the regulation of a specific list of “seven dirty words”, it had not addressed the “great miasma” of things now regulated in the “broadness of the Commission’s menace.” 

When the discussion turned to the supposed purposes of the indecency policy, things didn’t get better for the agency.  The Commission claimed that the main purpose of the policy was to protect children from hearing expletives, to which Judge Hall asked in response how that purpose was served by the “exception” for news programming, questioning whether children could tell the difference in the use of expletives in different types of programming. The Court also queried FCC counsel about why use of the V-Chip was not a better, less-restrictive solution to enable parents to protect their children from broadcast expletives. Judge Leval asked whether, if technology exists that could allow parents to filter programming for their children, parents with the lowest tolerance for questionable language – those who may not let their children outside due to fear they might “hear a nasty” – should be allowed to dictate what other viewers and listeners should hear.  

While the Second Circuit’s decision probably won’t be issued for a couple of months, there is little doubt that it will find the FCC’s current indecency regime, at least as it applies to “fleeting expletives”, unconstitutional.   Of course, that is not likely to be the end of things. The next decision out of the Second Circuit is almost certain to be appealed to the Supreme Court, which will have the opportunity to address the constitutional issues it declined to address the last time.  

Meanwhile, moving along on a parallel track is CBS’s appeal of the FCC’s decision fining it for broadcast of Janet Jackson’s infamous “wardrobe malfunction” in 2004. As we all know, the Third Circuit initially found that fine to be arbitrary and capricious, but was asked by the Supreme Court to rethink that decision in light of the remand of the Second Circuit’s original decision.  Oral arguments in the Third Circuit are scheduled for February 23, which could mean a new Third Circuit decision sometime in the late spring or summer.   It is possible that both Courts’ decisions could be consolidated in a single Supreme Court case, probably in the 2010-2011 term.