######### Before the

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

In the Matter of

)

The Commission's Forfeiture ) CI Docket No. 95-6

Policy Statement and Amendment )

Of Section 1.80 of the Rules to Incorporate )

the Forfeiture Guidelines )

**[MEMORANDUM OPINION AND ORDER]{.underline}**

**Adopted:** **December 21, 1999** **Released: December 28, 1999**

**By the Commission:**

**I. INTRODUCTION**

1\. In this order, we deny two petitions for reconsideration of *Report
and Order* in this proceeding,[^1] both relating to interpretation of
Section 504(c) of the Communications Act of 1934, as amended, ("the
Act"), 47 U.S.C. § 504(c). We also provide guidance regarding our
interpretation of the downward adjustment criterion for minor
violations.

######### II. BACKGROUND

2\. In the *Report and Order*, the Commission established general
forfeiture policies. In so doing, it said that in determining the
forfeiture amount in a notice of apparent liability ("NAL"), it would
continue to look at facts underlying prior NALs issued to that party.
The Commission rejected the argument that this contravenes Section
504(c) of the Act, which provides that the fact of the Commission\'s
issuance of an NAL shall not be used in any other proceeding before the
Commission to the prejudice of the person to whom the NAL was issued
unless the forfeiture has been paid or a court has ordered payment and
the order has become final. 47 U.S.C. § 504(c). Consistent with Section
504(c) of the Act, the Commission reiterated that it would continue its
policy of not using the mere issuance of or failure to pay an NAL to the
prejudice of the party. The Commission concluded, however, that \"using
the *underlying facts* of a prior violation that shows a pattern of
non‑compliant behavior against a licensee in a subsequent renewal,
forfeiture, transfer, or other proceeding does not cause the prejudice
that Congress sought to avoid in Section 504(c)."[^2] CBS Radio and
Tidewater Communications, Inc. ("Tidewater"), ask us to reconsider this
aspect of the *Report and Order*.

######### 

######### III. DISCUSSION

3\. The language of the statute supports the Commission\'s
interpretation:

In any case where the Commission issues a notice of apparent liability
looking toward the imposition of a forfeiture under this Act*, that
fact* shall not be used, in any other proceeding before the Commission,
to the prejudice of the person to whom such notice was issued, unless
(i) the forfeiture has been paid, or (ii) a court of competent
jurisdiction has ordered payment of such forfeiture, and such order has
become final.

47 U.S.C. § 504(c) (emphasis added). The statute says that the *issuance
of an NAL* shall not be used against a person unless the forfeiture has
been paid or the person is subject to a final court order to pay. It
does not say that the facts underlying prior NALs shall not be used
against a person. As CBS Radio itself says, \"that language is
abundantly clear \-- the Commission may not, under any circumstances,
use *the existence of an unadjudicated forfeiture decision* \'in any
other proceeding before the Commission\[\] to the prejudice of the
person to whom such notice was issued . . . .\'\"[^3] As the Commission
made clear in the *Report and Order*, we will not use the existence of
an unadjudicated NAL against a person.[^4] We will thus not penalize
someone for challenging the NAL rather than paying it. Rather, we will
look only to the facts underlying prior NALs to determine whether the
person is engaging in a pattern of non-compliant behavior.

4\. The legislative history confirms our reading of the statute.
Although the Senate Commerce Committee Report noted that the Commission
could not use the pendency of a forfeiture action prior to final
adjudication against a licensee, the report went on to say:

> \[S\]ubsection (c) . . . is not intended to mean that the facts upon
> which a notice of forfeiture liability against a licensee is based
> cannot be considered by the Commission in connection with an
> application for renewal of a license, for example, or with respect to
> the imposition of other sanctions authorized by the Communications Act
> of 1934 . . . . \[F\]acts going to the fitness of a licensee could be
> introduced in evidence against such licensee notwithstanding that such
> facts are the basis of an order of forfeiture.

12 FCC Rcd at 17103 (¶ 33) (quoting S. Rep. No. 1857, 86^th^ Cong., 2d
Sess. 11 (1960)). The Senate Report also says that \"\[t\]he licensee
could not, therefore, complain of the introduction of such evidence so
long as he has the right to cross-examine the witnesses introducing it
and the further right to offer evidence to rebut it.\"[^5] CBS Radio
quotes this language and says that \"because licensees are not afforded
any cross examination or any similar procedural rights in the NAL
context, the facts or conduct underlying a mere forfeiture notice may
not be used as the basis for an upward adjustment in a subsequent
forfeiture proceeding.\"[^6] To the contrary, as explained in the
*Report and Order*,[^7] the licensee will always have the opportunity to
present evidence that the underlying facts relied on by the Commission
did not constitute a violation. It can do this before it is required to
pay by introducing evidence to that effect either in a Commission
hearing (*e.g.*, a renewal, transfer or forfeiture hearing) or in a
court action to enforce a forfeiture.

5\. This interpretation is not only consistent with the language of the
statute and the legislative history, but it is the most logical
implementation of the forfeiture scheme. It seems readily apparent that
the Commission has authority to take into account, in assessing a
forfeiture, a history of violations by a party that had not been the
basis for prior NALs. That is, for example, if a licensee committed a
minor violation of a rule, were admonished for it and then committed the
same violation again, the Commission could take the first violation into
account in setting a forfeiture amount for the second violation. But,
under petitioners' interpretation, if the first violation had been a
more serious one that led to a forfeiture, the Commission could not take
into account the first violation in setting the forfeiture amount for
the second violation. This would be illogical, to say the least.

6\. CBS Radio's other arguments, focusing on the indecency context, are
also unavailing. First, contrary to CBS Radio's suggestion that the *ACT
IV* case[^8] \"indicates that the Commission\'s current interpretation
of its authority under Section 504(c) is constitutionally suspect \--
under the First Amendment,\"[^9] the court in *ACT IV* in fact rejected
a facial challenge to the Commission\'s procedures for imposing
forfeitures for the broadcast of indecent materials,[^10] rejected the
plaintiffs\' First Amendment challenge,[^11] and explicitly declined to
address the plaintiffs\' argument under Section 504(c) of the Act.[^12]
Second, CBS Radio argues that \"administrative delays at both the
Commission and the Department of Justice effectively preclude prompt
judicial action\" and thus, \"the Commission\'s contention that the use
of the underlying facts of an unadjudicated NAL in subsequent Commission
proceedings does not prejudice the licensee rings particularly
hollow.\"[^13] In *ACT IV*, however, the court upheld the Commission\'s
procedures for imposing forfeitures for the broadcast of indecent
materials. The court rejected the claim \"that the delay allows the FCC
to take action against them \[licensees\] without affording them the
procedural safeguards necessary to avoid any abridgment of their first
amendment rights.\"[^14] The court also suggested that \"a broadcaster
\'suffering from demonstrably adverse consequences from government delay
in initiating the collection proceeding . . . could bring a declaratory
judgment action against the United States in the district
court.\'\"[^15] Third, contrary to CBS Radio's argument that the
Commission\'s indecency standard is vague and causes a \"chilling effect
on freedom of speech\" that \"exacerbates the prejudice to which
broadcasters will be subjected if the Commission\'s interpretation of
Section 504(c) is permitted to stand,\"[^16] the courts have repeatedly
upheld the Commission\'s indecency standard against vagueness
challenges.[^17] The Supreme Court's decision in *Reno v. ACLU*,[^18]
which struck down an indecency standard applied to the Internet similar
to that applied to the broadcast medium, did not question (as suggested
by CBS Radio[^19]) the constitutionality of the Commission\'s indecency
standard in the broadcast context, but rather reinforced it.[^20]
Fourth, CBS Radio criticizes the Commission for not having published
\"industry guidance\" relating to broadcast indecency.[^21] While we
still intend to issue such guidance, we continue to believe that our
existing rulemaking orders and case law provide sufficient guidance to
avoid any constitutional defect. Finally, there is no basis for CBS
Radio's argument that a statement made by a Commissioner suggested that
he had prejudged the merits of future indecency cases.[^22] In any
event, the issue is moot since that Commissioner no longer is a member
of the Commission.

7\. Finally, on our own motion we provide the following guidance
regarding the downward adjustment factor for minor violations set forth
in our rules. This factor is intended to reflect the direction in
Section 503(b)(2)(D) of the Act that the Commission take into account in
setting forfeiture amounts, among other things, the "gravity of the
violation . . . ." 47 U.S.C. 503(b)(2)(D). Some violations may be minor
within the same specific category of violation. The fact that the
violation involved is statutory does not affect this analysis.
Accordingly, we reverse the Commission's prior statement that no
statutory violation can be deemed to be minor for purposes of making
downward adjustments to a forfeiture amount.[^23]

**IV. ORDERING CLAUSE**

8\. Accordingly, IT IS ORDERED THAT, the petitions for reconsideration
filed by CBS Radio and Tidewater Communications, Inc. ARE DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: 12 FCC Rcd 17087 (1997).

[^2]: ^?^ *Id.* at 17103 (¶ 34) (emphasis added).

[^3]: CBS Radio Petition at 7 (emphasis added).

[^4]: 12 FCC Rcd at 17103 (¶ 34). *See also Letter to Evergreen Media*,
    8 FCC Rcd 1266, 1267 n.5 (1993) (\"Consistent with the provisions of
    Section 504(c) of the Communications Act, we do not take into
    account in today\'s action the fact that this forfeiture order
    remains outstanding; we simply cite it to exemplify the pattern of
    apparent misconduct warranting the fine we set today.\").

[^5]: 12 FCC Rcd at 17104 (¶ 36) (quoting S. Rep. No. 1857, 86^th^
    Cong., 2d Sess. 11 (1960)).

[^6]: CBS Radio Petition at 4.

[^7]: 12 FCC Rcd at 17103, 17104 (¶¶ 35, 36).

[^8]: *Action for Children\'s Television v. FCC*, 59 F.3d 1249 (D.C.
    Cir. 1995), *cert. denied*, 116 S. Ct. 773 (1996) ("*Act IV"*).

[^9]: CBS Radio Petition at 7.

[^10]: 59 F.3d at 1259.

[^11]: *Id*. at 1260.

[^12]: *Id*. at 1255, 1260.

[^13]: CBS Radio Petition at 9.

[^14]: 59 F.3d at 1255, 1260.

[^15]: *Id*. at 1262 (quoting *Pleasant Broadcasting Co. v. FCC*, 564
    F.2d 496, 502 (D.C. Cir. 1977)).

[^16]: CBS Radio Petition at 12.

[^17]: *See, e.g., Action for Children\'s Television v. FCC*, 58 F.3d
    654, 659 (D.C. Cir. 1995) ("*Act III"*) (\"At the outset, we dismiss
    petitioners\' vagueness challenge as meritless. The FCC\'s
    definition of indecency in the new regulations is identical to the
    one at issue in *Act II*, where we stated that \'the Supreme
    Court\'s decision in *Pacifica* dispelled any vagueness concerns
    attending the \[Commission\'s\] definition,\' as did our holding in
    *Act I*\"), *cert. denied*, 116 S. Ct. 701 (1996).

[^18]: 117 S. Ct. 2329 (1997).

[^19]: CBS Radio Petition at 11 n.6.

[^20]: 117 S. Ct. at 2343 (referring to the "special justifications for
    regulation of the broadcast media that are not applicable to other
    speakers").

[^21]: CBS Radio Petition at 10.

[^22]: CBS Radio Petition at 12-13.

[^23]: *Paging Network of Los Angeles, Inc.*, 8 FCC Rcd 1702 (1993).
    *See also Catherine Wadill*, 13 FCC Rcd 23861 (1998) (citing *Paging
    Network* .)