Fox Makes Law

Yesterday, the Supreme Court decided FCC v. Fox Television Stations. The case made big news because of its titillating facts: the FCC determined that Fox violated the statutory prohibition against broadcasting "any . . . indecent . . . language," 18 U.S.C. § 1464, by broadcasting the 2002 and 2003 Billboard Music Awards, during each of which celebrities (Cher and Nicole Richie) used expletives that made it onto the air unbleeped. The Commission rejected its prior view that the "fleeting," nonliteral use of individual expletives is not actionable and determined that the broadcasts, taken in full context, violated the indecency prohibition.

The context ensures that the case captures public attention, but for us administrative law professors the interesting thing is that the case is just bristling with ad law principles. The Court declined to consider any First Amendment issues in the case (those remain open for further consideration), but ad law issues were definitely on the menu. The case positively chock full of them.

Here's a quick rundown of ad law points that the Court decided:

* The Court reminded us that the Administrative Procedure Act "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." Courts always have a tendency to make up procedural rules and impose them on agencies, so the Court's reminder that courts can only enforce the APA is important.

* The Court also reminded us that the standard of review under the APA "arbitrary" or "capricious" test is "narrow."

* Probably most important, the Court decided that judicial review is not heightened or more searching when an agency changes its past practice. The Court agreed that the agency must provide an explanation that shows that it is aware that it is changing its practice (the agency cannot simpy ignore what it has done in the past), but it has no duty to prove to a court's satisfaction that its new policy is better than the old.

This is a useful clarification. I had always understood this to be the rule -- the principle that an agency must explain its changes of course traces back to a D.C. Circuit opinion in which Judge Leventhal wrote that "an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored." That seems pretty clearly to say what the Supreme Court said yesterday, but somehow, it gradually got transmuted, in the minds of some courts, into the principle that an agency is subject to some kind of heightened or more stringent review when it changes its mind. As far as I can see, Judge Leventhal never meant anything more than that agencies should not change course out of ignorance. They must say "we know what we used to do, but we don't like it anymore." But so long as the new policy would have been permissible as an original matter, the agency should remain free to switch to it.

In part, this reflects the fact that some agency policies can and should be expected to flip with changes in political control of the executive branch. If Democrats like some policies and Republicans prefer others, and either policy would be permissible for an agency to adopt under its organic statute (i.e., the statute vests the agency with discretion to make the choice), neither party should be able to entrench its view past its time in office. When an election changes the President and, therefore, the agency heads, the agency should be free to take that into account. If party control shifts from Democratic to Republican and back again, we obviously can't require the agency to show that each new policy is better than old -- A can't be greater than B and B greater than A.

* The Supreme Court held that arbitrary and capricious review is no more stringent than usual when constitutional liberties are involved. The "avoidance" canon, which counsels courts to interpret statutes so as to avoid constitutional difficulties, is a principle of statutory construction, not a principle of arbitrary and capricious review.

* The Court held that, although agencies are required to provide factual support for their decisions, this requirement does not mean that they always have to gather empirical evidence. In the Fox case, the Court determined that an agency would have no practical way to gather empirical evidence to prove that broadcast profanity could harm children. Therefore, the Court held, the agency was free to act on the plausible intuitions that children mimic the behavior they observe, and that a per se exemption for fleeting expletives would lead to increased use of such expletives on television.

* The Court held that judicial review of "independent" regulatory agencies (those where the agency heads do not serve at the pleasure of the President but have some tenure protection) is no different than review of agencies fully controllable by the President.

Whew! It's not often that a single case makes so many administrative law points, one after another. Look out for this case in a casebook near you soon.