28 F.3d 1232 | D.C. Cir. | 1994
Opinion for the Court filed by Circuit Judge SILBERMAN.
The Commission issued, without notice and comment, a schedule of base penalties and adjustments to determine the appropriate fines for violations of the Communications Act. We conclude that the penalty schedule is not a policy statement and, therefore, should have been put out for comment under the Administrative Procedure Act.
I.
Section 503(b) of the Communications Act authorizes the FCC to impose “monetary forfeitures” (fines) on licensees for violations of the Act or of regulations promulgated thereunder, taking into account “the nature, circumstances, extent and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require.” 47 U.S.C. § 503(b)(2)(D) (1988). The statute provides a maximum fine schedule in accordance with classification of licensee: $25,000 for broadcasters and cable television operators, $100,-000 for common carriers (such as telephone companies), and $10,000 for other service providers. For each day of a continuing violation, the Commission may assess up to $250,000 for broadcasters, $1,000,000 for common carriers, and $75,000 for others. 47 U.S.C.A. § 503(b)(2) (West 1991).
The FCC decided in 1991 to abandon its traditional case-by-case approach to implementing section 503(b) and issued an order to “adopt more specific standards for assessing forfeitures.” Standards for Assessing Forfeitures, 6 F.C.C.R. 4695 (1991), recon. denied 7 F.C.C.R. 5339 (1992), revised, 8 F.C.C.R. 6215 (1993). The forfeiture standards, set forth in a schedule appended to its order, contemplate a base forfeiture amount for each type of violation, which amount is calculated as a percentage (varying on the violation) of the statutory maxima for the different services. Thus, the base forfeiture amount for false distress communications is 80% of the statutory maxima: i.e., $20,000 per violation for broadcasters, $80,000 for common carriers, and $8,000 for others. The FCC asserted that setting the base amounts as a percentage of the maximum fines permitted by Congress for each category of licensee best furthered the goals of the statute. See 6 F.C.C.R. at 4695. The fines schedule also provides for adjustments to the base amount depending on various aggravating or mitigating factors. The base amount, for instance, is increased 20-50% for “substantial economic gain” and reduced 30-60% for “good faith or voluntary disclosure.”
Petitioner, a trade group of telephone companies that unsuccessfully sought reconsideration before the agency, mounts a double-barreled challenge to the forfeiture standards. It claims that the Commission violated the Administrative Procedure Act by issuing the standards without notice and an opportunity to comment. Petitioner also contests the substantive validity of the prescribed base forfeiture amounts, asserting that FCC’s pereentage-of-maxima approach arbitrarily discriminates against common carriers by subjecting them to greater fines than other licensees for the exact same conduct.
II.
Petitioner’s second question, whether the FCC is authorized to base its schedule of fines for different classes of licensees by tracking the statutory maxima for those classes, strikes us as quite difficult. We need not, however, answer that’ question
The Commission claims that the standards are only general statements of policy exempt from the notice and comment obligation that the APA imposes on the adoption of substantive rules.
The difficulty we see in the Commission’s position is that the appendix affixed to the short “policy statement” sets forth a detailed schedule of penalties applicable to specific infractions as well as the appropriate adjustments for particular situations. It is rather hard to imagine an agency wishing to publish such an exhaustive framework for sanctions if it did not intend to use that framework to cabin its discretion. Indeed, no agency to our knowledge has ever claimed that such a schedule of fines was a policy statement. It simply does not fit the paradigm of a policy statement, namely, an indication of an agency’s current position on a particular regulatory issue.
Athough sometimes we face the difficulty of reviewing a statement before it has been applied and therefore are unsure whether the agency intends to be bound,
In Cargo Vessel Kodiak Enterprise, 7 F.C.C.R. 1847 (1992), the Commission ordered a forfeiture of $50,000 where strict application of the standards would have amounted to $155,000. The reason given, however, was that “[wjhen an inspection certificate expires while a vessel is at sea, our policy is not to assess a forfeiture for the period between the expiration of the certifi
The Commission is left to rely on a single opinion, James Scott Martin, 7 F.C.C.R. 3524 (1992), in which it noted that under the standards, the base forfeiture amount would have been $8000. “Under the circumstances of this case,” however, the Commission imposed a fine of $1000. Id. The decision admittedly is ambiguous as to whether the Commission applied downward adjustment criteria under the standards (which, petitioner contends, could yield a $1000 bottom line) or exercised independent discretion in reaching that amount. But even if we resolved the ambiguity in the Commission’s favor, that would mean that the Commission exercised discretion in only one out of over 300 cases, which is little support for the Commission’s assertion that it intended not to be bound by the forfeiture standards. Cf. McLouth Steel Products Corp. v. Thomas, 838 F.2d 1317, 1321 (D.C.Cir.1988).
If there were any doubt as to the nature of the standards — and we do not think there is — the Commission’s own Common Carrier Bureau in David L. Hollingsworth, 7 F.C.C.R. 6640 (Com.Car.Bur.1992) supported petitioner’s argument by refusing to consider a claim that the fine set forth in the schedule was inequitable as applied to a particular respondent. The Bureau responded to this challenge to the substance of the policy statement by asserting that the argument “should have been raised in a petition by [respondent] for reconsideration of the Policy Statement.” Id. That certainly indicates that the Bureau thought the “Policy Statement” was a rule in masquerade. For “[w]hen the agency applies the policy in a particular situation, it must be prepared to support the policy just as if the policy statement had never been issued.” Pacific Gas & Elec. Co. v. Federal Power Comm’n, 506 F.2d 33, 38 (D.C.Cir.1974). Otherwise, a party would not be able to challenge the policy either when issued as a statement or when applied in an individual ease. See McLouth, 838 F.2d at 1321; Panhandle Producers & Royalty Owners Ass’n v. Economic Regulatory Admin., 822 F.2d 1105, 1110 (D.C.Cir.1987). Indeed, the Commission rejected petitioner USTA’s petition for reconsideration of the standards:
In light of the fact that the Policy Statement simply provides some general guidance that may be used in particular cases, we believe such concerns are more appropriately addressed in the context of specific cases. Accordingly, we will not address such implementation matters here.
7 F.C.C.R. at 5340. It seems that the Commissioner has sought to accomplish the agency hat trick — avoid defense of its policy at any stage. To be sure, the Commission disavows the Bureau’s opinion, suggesting that if review to the full Commission had been sought, Hollingsworth would have been decided somewhat differently.
The Commission appears to wish to avoid grappling with the issue which we noted at the outset is quite vexing — whether the disparate treatment of different classes of licensees in the forfeiture schedule is reasonable and authorized under the statute. Neither in a direct challenge to the policy nor in an individual enforcement proceeding, according to the Commission, would common carriers be entitled to claim that their treatment vis
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Accordingly, we grant the petition for review and set aside the forfeiture standards.
So ordered.
. We likewise do not reach the argument made by various civil rights organizations who intervened that the Commission had failed to explain why the fines for violations of equal employment regulations were not greater.
. The Commission also raises ostensible jurisdictional arguments, standing and ripeness, which really turn on the same question — whether the statement is binding. As such, they are circular and not worth separate consideration as jurisdictional arguments.
.In Public Citizen, 940 F.2d at 683-84, we held a policy statement unripe for judicial review where the statement's language was equivocal and the policy had not been actually applied.
. We note, however, that regulations permit the Commission, on its own motion, to review and reverse decisions made with delegated authority. 47 C.F.R. § 1.117 (1993).