PRESS RELEASE: Eleventh Circuit's Vacation of Gray Television's Forfeiture Should Raise Caution Flags at FCC

Free State Foundation President Randolph May issued the following statement regarding the Court of Appeals for the Eleventh Circuit's opinion today vacating a forfeiture penalty of $518,283 assessed against Gray Television, Inc: 

The Free State Foundation filed an amicus brief in Gray Television's appeal of its forfeiture because of certain concerns relating the FCC's rationale for imposing the forfeiture, including whether Gray's due process rights had been violated for lack of fair notice regarding whether Gray's conduct actually violated the Commission's rules as they had been interpreted. While the court did not address the specific points FCC raised, it did hold that the entire
forfeiture should be vacated because the Commission failed to provide fair notice and acted arbitrarily and capriciously in failing to explain the basis for its Notice of Apparent Liability (NAL).

 

The FCC's enforcement regime has been plagued by problematic examples of overreach and abuse in the past, which is a major reason why FSF participated as an amicus in the Gray appeal. Before the agency is allowed to impose massive penalties, it's required as a matter of due process that parties regulated by the agency have fair notice of what's expected of them to comply with Commission rules. Conservatives and rule-of-law advocates have always been rightly concerned by "regulation by enforcement" – that is using an enforcement regime to establish new heretofore unknowable regulatory requirements.

 

The FCC's recent imposition of a massive forfeiture on Telnyx, and others, may well fall into this category, raising similar due process and fair notice concerns regarding whether the conduct alleged to be violative of the agency’s rules was known or knowable.

PRESS RELEASE: FSF Files Amicus Brief in FCC Forfeiture Case Raising Important Due Process and First Amendment Issues

On Thursday, May 31, the Free State Foundation filed the attached amicus brief in the Court of Appeals for the Eleventh Circuit asking the court to vacate a forfeiture in the amount of $518,283 imposed on Gray Television, Inc. for allegedly violating the FCC’s Local TV Ownership Rule. Because the FCC’s imposition of the forfeiture raises important due process and First Amendment issues, FSF filed an amicus brief in support of Gray’s appeal. Below is an excerpt from the brief’s Introduction:

"This case raises important due process and First Amendment issues that extend beyond the immediate impact that this Court’s ruling may have on Gray or on any one TV broadcaster. Agencies must articulate rules with legally fixed standards, and agencies must follow those rules to avoid arbitrary enforcement. No agency may sanction a regulated party based on a freewheeling interpretation of its own rules, articulated for the first time in an administrative proceeding. The FCC’s approach to dealing with Gray’s alleged offenses in this case calls to mind a game of government “gotcha,” full of surprises and lacking reasoned decision making.

Unless the Court vacates the FCC’s forfeiture order, this case could serve as a roadmap for agencies to flout due process and to abridge free speech through the arbitrary use of authority. If the FCC’s order stands, it likely will have negative consequences for other parties subject to the FCC’s expansive interpretation of its regulatory jurisdiction and for all regulated parties.

The FCC’s order violates Gray’s due process and First Amendment rights. As for due process, Gray lacked fair notice that the transaction violated the so-called “top-four prohibition” found in the local television ownership rule at 47 C.F.R. § 73.3555(b). The FCC does not even claim that Gray violated the plain terms of this regulation. Gray did not. Instead, the agency claims that Gray violated an interpretive note to the rule, which itself depends on a flawed reading of the FCC’s 2016 Second Report and Order (adopting Note 11). That is agency decision making run amok.

And this is only the beginning of the layers of convoluted and confusing administrative interpretations adopted by the FCC, upon which imposition of the forfeiture depended. If anything, to comport with due process requirements, the FCC’s newfound interpretation of its authority to penalize Gray—based on an amalgamation of the Rule (47 C.F.R. § 73.3555) + Note 11 + the Second Report and Order – should have been applied only prospectively, not retroactively.

As for the First Amendment, the forfeiture order plainly applies to Gray’s acquisition of a network program affiliation agreement, not the transfer of a broadcast license. The agency apparently recognized a limitation on its ability to regulate Gray’s transaction in these circumstances because the FCC purported to rely on “ancillary authority” found nowhere in the relevant statutory text. In doing so, the Commission effectively seeks to regulate broadcast content. But it cannot do that: both the Communications Act, 47 U.S.C. § 326, and the First Amendment prohibit the FCC from regulating broadcast content. This Court should vacate the agency’s forfeiture order for these reasons.

In fact, the media landscape has changed dramatically in the years since the FCC adopted its television ownership rules. Residents of Anchorage, Alaska, and almost all other consumers across the country, have access to a plethora of media outlets, including multiple sources of video news, information, and entertainment. It is arbitrary and capricious for the FCC to impose forfeiture in this case without accounting for the First Amendment. The FCC erred in broadly applying its ownership rules, whose constitutional rationale has been called into serious question and are now more dubious than ever, in a way that regulates broadcast content. This is especially so when the agency steadfastly refuses to complete on a timely basis the periodic reviews that Congress has mandated specifically to determine “whether any of such rules are necessary in the public interest as the result of competition.” 47 U.S.C. § 202(h).