United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 13, 2001 Decided February 8, 2002

No. 99-1463

Grid Radio and

Jerry Szoka,

Appellants

v\.

Federal Communications Commission,

Appellee

National Association of Broadcasters,

Intervenor

Consolidated with

99-1527

Appeal from and Petition for Review of an Order of the

Federal Communications Commission

Hans F. Bader argued the cause for appellants/petitioners. With him on
the briefs was Michael E. Rosman. Michael P. McDonald entered an
appearance.

Rodger D. Citron, Counsel, Federal Communications Commission, argued the
cause for appellees/respondents. With him on the brief were Jane E.
Mago, General Counsel, Daniel M. Armstrong, Associate General Counsel,
Jacob M. Lewis and Mark Davies, Attorneys, U.S. Department of Justice.
David Silberman, Counsel, Federal Communications Commission, entered an
appearance.

Henry L. Baumann and Jack N. Goodman were on the brief for intervenor
National Association of Broadcasters.

Before: Tatel and Garland, Circuit Judges, and Williams, Senior Circuit
Judge. [^1]

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: An unlicensed operator of a low-power FM radio
station challenges a Federal Communications Commission order directing
him to cease broadcasting. He contends the order and an ancillary
\$11,000 forfeiture are unenforceable because the Commission\'s ban on
low-power FM stations, in place until January 2000, contravened the
Communications Act of 1934 and the First Amendment, and because the
forfeiture is unreasonable, excessive, and beyond his ability to pay. We
reject these claims and affirm. Absent a demonstration that the
low-power ban was indisputably unlawful or unconstitutional, the
Commission had no obligation to reconsider the ban in the context of an
enforcement proceeding against a single unlicensed operator. Moreover,
the forfeiture is reasonable under the circumstances of this case, and
the operator waived his inability-to-pay claim.

I.

Section 301 of the Communications Act of 1934 makes it unlawful to
operate a radio station without a license from the Federal
Communications Commission. 47 U.S.C. § 301. Historically, the
Commission\'s elaborate licensing scheme included four classes of
licenses\--A, B, C, and D\--distinguished on the basis of such factors
as station location, antenna height, and transmission power. Until 1978,
the Commission allocated Class D licenses to \"microbroadcast
stations,\" so called because they operate at power levels of less than
one hundred watts and reach listeners within a two- to twelve-mile
radius of the point of transmission. In 1978, however, choosing to
\"str\[ike\] the balance in favor of licensing higher-powered stations
to ensure that large audiences were served,\" the Commission adopted a
\"microbroadcasting ban\" pursuant to which it stopped awarding Class D
licenses. Creation of a Low Power Radio Serv., 15 F.C.C. Rcd. 19,208,
19,236 (2000) (reconsideration) (discussing Changes in the Rules
Relating to Noncommercial Educ. FM Broad. Stations, 70 F.C.C.2d 972, 983
(1978) (codified at 47 C.F.R. § 73.512(d))).

At all times relevant to this case, appellant Jerry Szoka knew of both
the licensing requirement and the microbroadcasting ban. Yet from 1995
until mid-2000, Szoka operated Grid Radio, an unlicensed low-power
station in Cleveland, Ohio. He never applied for a license because he
believed applying would be futile given the microbroadcasting ban.

In early 1997, after receiving a complaint about Grid Radio, the
Commission sent Szoka two successive letters warning him that if he
continued to operate the station, he could face fines, forfeitures, or
criminal sanctions. Responding to the first letter, Szoka urged the
Commission to \"ignore\" his unlicensed operations because Grid Radio
\"is top quality, provides a much needed community service without
commercials, and \[does not\] interfer\[e\] with other stations.\" Jerry
Szoka, 13 F.C.C. Rcd. 10,630, 10,630-31 (1998) (order to show cause).
Nothing in the record indicates whether Szoka responded to the second
letter.

Despite the Commission\'s letters, Szoka continued operating Grid Radio.
Id. at 10,631. In response, the Commission issued an order directing
Szoka to show cause why he should not be ordered to cease and desist
from violating section 301. The show-cause order specified two issues
for consideration at an upcoming hearing: whether Szoka was
\"transmitt\[ing\] radio energy without appropriate authorization,\" and
if so, whether he \"should be ordered to cease and desist\" from that
activity. Jerry Szoka, FCC 98D-3, 1998 FCC LEXIS 4563, \*1 (1998) (ALJ
summary decision). The order also indicated that the Commission was
considering \"whether \... Szoka should forfeit \$11,000\"\--the maximum
daily penalty (adjusted for inflation) for a continuing violation of the
Act. Id. at \*1, \*8 (citing 47 U.S.C. § 503(b)(2)(C)); see also 47
C.F.R. § 1.80(b)(5) (detailing how to adjust forfeitures for inflation).

The Chief of the Commission\'s Compliance and Information Bureau moved
for summary decision of the issues identified in the show-cause order.
Although Szoka conceded he had no license to operate Grid Radio, he
objected to the summary judgment motion, arguing he had no obligation to
comply with Commission licensing rules because the microbroadcasting ban
was both unlawful and unconstitutional. He also challenged the
forfeiture as unreasonable and excessive in violation of the Fifth and
Eighth Amendments to the United States Constitution.

In light of Szoka\'s concession that he lacked a license to operate Grid
Radio, the Administrative Law Judge concluded that no substantial issues
of material fact remained, granted the Commission\'s motion for summary
decision, issued a cease-and-desist order, and imposed the forfeiture.
Jerry Szoka, 1998 FCC LEXIS 4563, at \*3-4. In so doing, the ALJ
rejected Szoka\'s constitutional challenges to the microbroadcasting ban
on two alternative grounds: on the merits because the \"right of free
speech does not include the right to use radio facilities without a
license\"; and for lack of standing because Szoka failed to apply for
either a license or a waiver of the microbroadcasting ban. Id. at \*6-8
(citing NBC v. United States, 319 U.S. 190, 227 (1943); United States v.
Dunifer, 997 F. Supp. 1235, 1241 (N.D. Cal. 1998); Stephen Paul Dunifer,
11 F.C.C. Rcd. 718, 727 (1995)). Rejecting Szoka\'s Fifth and Eighth
Amendment claims, the ALJ found that \"imposition of a forfeiture is
civil and not a criminal penalty,\" and that \"the statutory scheme
authorizing the \[Commission\] to enforce forfeitures \... contains
appropriate safeguards which satisfy due process requirements\....\" Id.
at \*9-10.

The Commission affirmed the ALJ\'s order, finding Szoka without standing
to challenge the licensing regulations and rejecting his constitutional
challenges to the microbroadcasting ban and forfeiture. Jerry Szoka, 14
F.C.C. Rcd. 9857, 9857 (1999). The Commission informed Szoka that he
could file a claim of inability to pay the forfeiture by submitting tax
returns or other financial statements covering the previous three years.
Id. at 9867.

Szoka filed petitions for reconsideration and for a stay of the orders
against him, claiming, among other things, that he was unable to pay the
forfeiture. In support, Szoka submitted a financial statement and tax
returns for 1996 through 1998 showing \$8,500 in assets and an annual
adjusted gross income averaging about \$12,000. Jerry Szoka, 14 F.C.C.
Rcd. 20,147, 20,150 (1999) (reconsideration). The Commission denied
Szoka\'s petitions for reconsideration and for a stay, and also rejected
without a hearing his claim of inability to pay, finding that although
Szoka\'s \"stated assets and income do not appear to be large,\" he
failed to \"submit\[ \] sufficient objective evidence and supporting
information to sustain his claim that they are so inadequate as to
render him unable to pay a forfeiture.\" Id. The Commission pointed out
that although its Compliance and Information Bureau had invited Szoka to
file further documentation in support of his financial claims, he failed
to do so. Id. at 20,150 n.2.

Following the Commission\'s rejection of Szoka\'s motion for
reconsideration and for a stay, the cease-and-desist order became
effective. Because Szoka continued to operate Grid Radio, the Commission
filed suit in the United States District Court for the Northern District
of Ohio to compel compliance. See 47 U.S.C. § 401(b) (authorizing
Commission to \"apply to the appropriate district court of the United
States for the enforcement of \[most orders of the Commission\]\").
Finding the cease-and-desist order \"regularly made and duly served,\"
the district court ordered Szoka to stop broadcasting by March 1, 2000.
United States v. Szoka, 260 F.3d 516, 523 (6th Cir. 2001) (citing
district court\'s affirmance of the Commission\'s cease-and-desist order
against Szoka) (internal quotation marks omitted). The Sixth Circuit
affirmed, declining to reach Szoka\'s constitutional challenge to the
microbroadcasting ban because in its view, the D.C. Circuit has
exclusive jurisdiction to \"nullify a cease-and-desist order based on
unconstitutional regulations promulgated by the \[Commission\].\" Id. at
528.

In the meantime, Szoka filed this appeal of the cease-and-desist order
and forfeiture. He alleges that: (1) prior to issuing the
cease-and-desist order, the Commission was obligated to demonstrate that
shutting down Grid Radio would further the public interest; (2) the
now-defunct microbroadcasting ban contravened the Act\'s requirement
that the Commission regulate \"in the public interest,\" 47 U.S.C. §
303(g); (3) the ban violated the First Amendment; (4) the forfeiture
constitutes an \"excessive fine\[ \]\" in violation of the Eighth
Amendment; and finally, (5) the forfeiture is not the product of
reasoned decision-making and should be reduced in light of Szoka\'s
financial hardship. Although the Commission recently abandoned its
microbroadcasting ban and adopted new rules authorizing the licensing of
low-power stations, see Ruggiero v. FCC, No. 00-1100, slip. op. at 3-5,
\_\_ F.3d \_\_ (D.C. Cir. Feb. 8, 2002), Szoka has not applied for a
license under the new regime, nor does he challenge that regime here.

II\.

The Commission argues that because Szoka failed to apply for a license
or to seek a waiver of the microbroadcasting ban, he lacks standing to
raise his constitutional and statutory challenges. Since this argument
implicates our jurisdiction, we consider it first.

The Commission\'s standing argument rests on its assertion that Szoka
could have challenged the microbroadcasting ban without operating
illegally\--and therefore without subjecting himself to the
cease-and-desist order or incurring the forfeiture. For example, the
Commission points out that had Szoka applied for a waiver and the
Commission denied his application, he could have appealed to this court
and raised his constitutional and statutory challenges to the
microbroadcasting ban at that time. 47 U.S.C. § 402(b)(1). Further, if
Szoka had requested a waiver and the Commission dragged its feet in
responding to the request, Szoka could have petitioned this court for a
writ of mandamus to compel Commission action. See Telecomm. Research &
Action v. FCC, 750 F.2d 70, 79 (D.C. Cir. 1984) (discussing this
court\'s jurisdiction to hear claims of unreasonable agency delay).
Given the number of lawful avenues available to him to challenge the
microbroadcasting ban, the Commission argues, Szoka cannot now claim
that his unlawful broadcasts were necessary to obtain judicial review of
the ban. Thus, Szoka\'s injury is traceable not to the ban but to the
more general prohibition against operating without a license, which
Szoka does not challenge here. Accordingly, the Commission contends,
Szoka has failed to demonstrate one of the prerequisites to Article III
standing: a personal injury fairly traceable to the challenged
Commission action. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992).

We are unpersuaded. To begin with, the cease-and-desist order and
forfeiture are, as Szoka argues, present injuries, both of which are
fairly, if circuitously, traceable to the Commission\'s
microbroadcasting ban. The record before us is clear: But for the ban,
Szoka would have applied for a license, and the Commission points to no
individual characteristics\--of either Szoka or Grid Radio\--that would
have led it categorically to deny his application in the absence of the
ban. Moreover, we agree with Szoka that applying for a waiver would have
been futile. See Prayze FM v. FCC, 214 F.3d 245, 251 (2nd Cir. 2000)
(noting that although a plaintiff must generally submit to a policy \"to
establish standing to challenge\" its constitutionality, \"\[t\]his
threshold requirement \... may be excused \... where a plaintiff makes a
substantial showing that application for the benefit \... would have
been futile\"); Ellison v. Connor, 153 F.3d 247, 255 (5th Cir. 1998)
(same); cf. DKT Mem\'l Fund, Ltd. v. Agency for Int\'l Dev., 810 F.2d
1236, 1238 (D.C. Cir. 1987) (noting that \"otherwise qualified
non-applicants may have standing to challenge a disqualifying statute or
regulation\"). The Commission cites only two instances in the last two
decades in which it granted a waiver to the microbroadcasting ban\--once
to an Indian village in Alaska, where the microbroadcasting ban does not
apply, and once to a remote community in a Navajo-speaking area of New
Mexico, where high-power, English broadcasts are of little relevance.
Turro v. FCC, 859 F.2d 1498, 1500 n.1 (D.C. Cir. 1988) (noting these two
instances). Neither of these waivers suggests that the Commission would
seriously consider granting a waiver for Szoka to broadcast in English
in Cleveland, Ohio. Finally, we agree with Szoka that be-cause the
Constitution permits a person faced with an unconstitutional licensing
law to \"ignore it and engage with impunity in the exercise of the right
of free expression for which the law purports to require a license,\"
the illegality of his unlicensed operations cannot, as the Commission
implies, entirely preclude him from raising his constitutional claims.
Shuttles-worth v. City of Birmingham, 394 U.S. 147, 151 (1969).

III\.

Turning to the merits, we begin with Szoka\'s argument that under the
Communications Act the Commission should have considered whether
shutting down Grid Radio would further the public interest. According to
Szoka, his station served a \"niche audience\" \"not adequately
serv\[ed\]\" by full-power FM stations: \"gay men and women and the arts
community.\" Appellants\' Br. at 11. Valuable as Grid Radio\'s
broadcasts may have been, we think it clear that the Commission had no
obligation to consider the station\'s individual circumstances before
shutting it down. At the time this controversy began, the Commission had
determined that the public interest was best served by uniformly denying
licenses to low-power stations to promote \"the establishment of more
efficient, stable, full powered stations.\" Creation of a Low Power
Radio Serv., 15 F.C.C. Rcd. at 19,236 n.93 (internal citations omitted).
Although Szoka strenuously disagrees with that determination, the
Commission need not reevaluate well-worn policy arguments each time it
implements an existing rule in a narrow adjudicatory proceeding against
an acknowledged rule-breaker. Turro, 859 F.2d at 1500. To hold otherwise
would obligate the Commission to \"examine an entire range of policy
questions that are not unique to \[Szoka\] and are more appropriately
considered in a rulemaking proceeding.\" Id.

Nothing in C.J. Community Services v. FCC, 246 F.2d 660 (D.C. Cir.
1957), requires a different result. Although we concluded there that the
Commission could not shut down an unlicensed, low-power television
booster station without considering whether \"public interest,
convenience, and necessity would be served,\" our concern related to the
Commission\'s failure to consider or establish any licensing procedure
for booster installations. Id. at 662 (complaining that the Commission
had \"not made it possible, after all these years, for the issuance of a
license to a booster installation, such as is here disclosed\"). This
case is very different. Here, the Commission long ago established a
licensing regime for broadcast stations and expressly decided not to
issue licenses to low-power stations because of the risk of interference
to higher-power stations. Creation of a Low Power Radio Serv., 15 F.C.C.
Rcd. at 19,236 n.93. That decision would have no import if the
Commission had an independent obligation to consider on a case-by-case
basis the pros and cons of shutting down each individual, unlicensed
microradio operation. Where, as here, the Commission has evaluated the
public interest in a rulemaking, it would be absurdly inefficient\--and
would invite confusion\--to require it to perform the same evaluation
each time it enforces the resulting rule.

Szoka\'s broader claims\--that the microbroadcasting ban itself was
unlawful and unconstitutional, facially and as-applied to him\--present
a harder question, for we generally permit \"a party against whom a rule
is \[enforced\] \... \[to\] pursue substantive objections to the rule\"
at the time of enforcement. Indep. Cmty. Bankers of Am. v. Bd. of
Governors of the Fed. Reserve Sys., 195 F.3d 28, 34 (D.C. Cir. 1999).
Permitting Szoka or anyone else to operate without a license as a means
of challenging the microbroadcasting ban, however, could produce the
very \"chaos\" that, according to the Supreme Court, the broadcast
licensing regime was designed to prevent. Red Lion Broad. Co. v. FCC,
395 U.S. 367, 375-76 (1969). Moreover, we have no concern here that
\"limiting the right of review of the \... rule would effectively deny
\[Szoka\] \... an opportunity to question its validity.\" Functional
Music, Inc. v. FCC, 274 F.2d 543, 546 (D.C. Cir. 1958). Szoka could have
petitioned for a rulemaking or applied for a waiver and, if the
Commission denied his request, challenged that denial in the appropriate
circuit court. See supra p. 7; 28 U.S.C. § 2342(1); 47 U.S.C. § 402(a),
(b)(1). That he did neither, choosing instead to operate without a
license, makes it inappropriate for us to consider his challenge to the
microbroadcasting ban absent \"an undisputable indication \..., either
because of the reasoning of a Supreme Court decision or intervening
legislation,\" that the microbroadcasting ban was unlawful or
unconstitutional. Tribune Co. v. FCC, 133 F.3d 61, 68 (D.C. Cir. 1998)
(applying a similarly narrow scope of review in a case involving an
application for a waiver of certain broadcasting restrictions). Had
Szoka provided such an indication, we would invalidate the
cease-and-desist order and forfeiture. But none of his challenges to the
microbroadcasting ban clears this high bar.

Szoka first argues that the microbroadcasting ban conflicts with the
Commission\'s \"affirmative mandate to maximize use of the spectrum
resource.\" Appellants\' Br. at 48. Yet the Commission resolved just
this issue in its 1978 rulemaking when it concluded that licensing
low-power stations would interfere with the propagation of higher-power
stations. Because Szoka offers nothing to suggest that the 1978 policy
was indisputably unlawful, we decline now to consider his challenge to
it.

Recasting his public-interest argument as a challenge to the ban itself,
Szoka next claims that under the Act, the Commission must be \"flexible
and responsive in applying its \[microbroadcasting\] rule\[ \], so that
the public interest in a particular case is not undermined by a rigid
adherence to preestablished rules and regulations.\" Id. at 49. Turro
also answers this claim: \"Strict adherence to a general rule may be
justified by the gain in certainty and administrative ease.\" 859 F.2d
at 1500. Again, therefore, absent evidence that the microbroadcasting
ban was indisputably unlawful, the Commission was entitled to adhere to
it.

We reach a similar conclusion regarding Szoka\'s facial and as-applied
constitutional claims. According to Szoka, to survive First Amendment
scrutiny, \"the ban must have been at least a narrowly tailored method
of achieving a substantial governmental interest.\" Appellants\' Br. at
35 (citing FCC v. League of Women Voters, 468 U.S. 364, 380 (1984)).
Under this intermediate scrutiny standard, he argues, the Commission
\"had an obligation to revisit the viability of microradio in light of
rapid technological changes since \[the ban was adopted in\] 1978.\"
Appellants\' Br. at 37. That the Commission only began to reconsider its
microbroadcasting ban in 1999, he implies, indicates that the ban was
not narrowly tailored to the interest it served. Moreover, he claims
that the original interest served by the ban\--the need to promote
stable, higher-power stations to ensure efficient use of scarce
spectrum\--is no longer substantial given advances in broad-cast
technology.

We need not decide whether intermediate scrutiny is the appropriate
standard of review, see, e.g., News America Publ\'g Inc. v. FCC, 844
F.2d 800, 814 (D.C. Cir. 1988) (discussing the appropriate level of
scrutiny to apply to a statute restricting broadcast speech), as we see
two simpler responses to Szoka\'s arguments. First, although the Supreme
Court has \"obliquely suggested it might \[one day\] reconsider\" the
scarcity doctrine on which the microbroadcasting ban rests, judicial
ambivalence falls far short of a \"clear manifestation that \[a\] rule
\... is \[facially\] illegal.\" Tribune, 133 F.3d at 68 (discussing
League of Women Voters, 468 U.S. at 376-77 n.11). Second, Szoka offers
no evidence to suggest that his circumstances were so unique as to
impose on the Commission a constitutional obligation to apply the ban
differently to him than to any other unlicensed microbroadcaster. Absent
clear congressional or judicial signals that the microbroadcasting ban
was unlawful, or unequivocal evidence that Grid Radio\'s circumstances
warranted differential application of the ban, we think the Commission
could continue to enforce the ban and the chaos-averting licensing
regime.

IV\.

This brings us to Szoka\'s challenge to the \$11,000 forfeiture.
Decrying this sum as \"grossly disproportionate to the gravity of the
offense,\" Szoka first argues that the forfeiture violates the Eighth
Amendment\'s Excessive Fines Clause. Appellants\' Br. at 50. We
disagree. In the case on which Szoka relies, United States v.
Bajakajian, the government imposed a fine of over \$350,000 for failure
to report the export of currency. 524 U.S. 321, 324 (1998). Declaring
that forfeiture unconstitutional, the Court was primarily concerned that
the potential penalty for illegal export of currency would be indefinite
and unlimited\--and disproportionate to the offense\--if the government
could seize whatever amount of currency the unwitting \"exporter\"
happened to be carrying when caught. Id. at 334-40. No such problem
exists here. The \$11,000 represents the statutory penalty (adjusted for
inflation) for unlicensed operation of a radio station, or for each day
of a continuing violation. 47 U.S.C. § 503(b)(2)(C); 47 C.F.R. §
1.80(b)(4)-(5). The amount is neither indefinite nor unlimited, nor does
it seem excessive in view of Szoka\'s continued and willful violation of
the licensing requirement.

Szoka next argues that the forfeiture is \"\[n\]ot the \[p\]roduct of
\[r\]easoned \[d\]ecisionmaking.\" Appellants\' Br. at 52. As in any
arbitrary-and-capricious challenge, we \"presume the validity\" of the
agency\'s action, Kisser v. Cisneros, 14 F.3d 615, 618 (D.C. Cir.
1994)\--a presumption Szoka can overcome only by demonstrating that the
forfeiture constitutes a \"clear error of judgment,\" Citizens to
Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971), overruled on
other grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977). Nothing
in either the record or Szoka\'s briefs convinces us that the
Commission\'s decision to impose the maximum one-day penalty was clearly
erroneous: Szoka intentionally operated a radio station without a
license for over five years, continued to operate the station after
receiving two Commission warning letters, and even refused to shut down
after the Commission imposed the cease-and-desist order and forfeiture.
In light of Szoka\'s \"deliberate and willful\" violation of section
301, the penalty seems entirely reasonable. 47 U.S.C. § 503(b)(2)(D)
(indicating that in determining the amount of a forfeiture, the
Commission \"shall take into account,\" among other things, \"the
extent\[ \] and gravity of the violation and, with respect to the
violator, the degree of culpability\[ and\] any history of prior
offenses\").

Finally, in support of his argument that the Commission should have
reduced the fine because he demonstrated his \"inability to pay,\" Szoka
points to three years of tax returns showing adjusted gross income below
the poverty line. Appellants\' Br. at 58. He also argues that his three
capital assets\--radio equipment, a 37% interest in a nightclub lease,
and a 1/12th interest in a commercial building\--are illiquid and
unavailable to pay the forfeiture. When Szoka presented this evidence to
the Commission, however, the agency noted certain \"apparent
contradictions\" and concluded the evidence was \"not \... sufficient to
justify reduction of the proposed forfeiture.\" Jerry Szoka, 14 F.C.C.
Rcd. at 20,150. Moreover, the Commission indicated that although its
Compliance and Information Bureau had invited Szoka to supplement his
financial information, he declined to do so. Id. at 20,150 n.2. Indeed,
Szoka\'s counsel confirmed at oral argument that Szoka neither submitted
the requested supplemental information nor requested a hearing at which
to address the contradictions. We therefore find Szoka\'s
inability-to-pay claim waived.

V.

The decision of the Federal Communications Commission is affirmed.

So ordered.

[^1]: ^\*^ Senior Circuit Judge Williams was in regular active service
    at the time of oral argument.