Simington Vows Dissent From All Cash Forfeitures Post-Jarkesy in Kidvid Fine Opposition

The forfeiture order that prompted Simington’s ultimatum stems from incidents in 2018, where several stations aired a commercial for the Hot Wheels Super Ultimate Garage toy on 11 occasions during eight episodes of Hot Wheels-themed TV show Team Hot Wheels, violating FCC rules for children’s television. The incidents were the result of a “miscommunication” where Sinclair noted that the Hot Wheels ad shouldn’t be placed with Hot Wheels programming. However, “due to a change in how these restrictions were communicated, the message was not received by the Traffic department,” the order said. The broadcasters disclosed the violations to the FCC.

The FCC unanimously approved a notice of apparent liability on the matter in 2022 (see 2209210062. Sinclair Broadcast owned 85 of the 115 stations involved, with 10 others owned by Sinclair-affiliated companies Deerfield Media and Cunningham Broadcasting, and the forfeiture order assesses a $2.6 million penalty against Sinclair. Nexstar owned seven of the stations and faces a $182,000 forfeiture, and the others are smaller broadcasters mostly facing $20,000 penalties each. The order assesses a higher penalty against Sinclair per station because of what the FCC called “willful and repeated” violations, Sinclair’s scale and reach, and several kidvid violations Sinclair committed in the early 2000s.

Sinclair argued that the violations were a single incident, unintentional, and that its past violations shouldn’t count against it because they occurred so long ago. In addition, it argued that the FCC should have adjusted the penalty downward because Sinclair self-reported the violations, and it had a detailed system in place to prevent kidvid violations when the incidents occurred. The order, however, said, “To the contrary, the plain facts speak for themselves: Sinclair’s multi-layered review structure failed eight separate times within a period of several weeks.” It continued, “Such a result indicates that Sinclair’s compliance program was far from effective.” In his dissent, Carr said, “Under this circular logic, no set of internal controls could get credit in an enforcement action.”

Chairwoman Jessica Rosenworcel, in a statement with the order, said, “There is no question these limits were crossed here, where broadcasters mixed toy commercials with programming and violated our rules.” Rosenworcel highlighted that the forfeiture order is “virtually identical” to the 2022 NAL, which Carr and Simington voted for without comment.

In his brief dissent, Simington didn’t challenge the premise or specifics of the violations, but the agency’s enforcement policy as a whole. “Under new and controlling Supreme Court precedent, the Commission’s authority to assess monetary forfeitures as it traditionally has done is unclear,” Simington said. Carr took a similar position on the FCC’s enforcement policy post-Jarkesy, but also reiterated his criticisms about the way the agency avoids limits on penalties by framing incidents as multiple violations (see 2405030066). “Our enforcement practices are at a fork in the road after the Supreme Court’s latest string of administrative law decisions,” said Carr, adding that the agency is on “thinning ice” after Jarkesy, Chevron case Loper Bright v Raimondo, and Ohio v. EPA. “I think the days are numbered for FCC enforcement decisions that rest on stacked penalties, creative math, surprise standards, and extraneous behavioral conditions.”

The Jarkesy SCOTUS decision that the SEC can’t impose monetary forfeitures without holding jury trials doesn’t apply to the FCC forfeiture process because the targets of FCC enforcement actions have a route to a jury trial, the agency said in a footnote, repeating previous arguments. If the target of a forfeiture order doesn’t pay the fine and DOJ chooses to force it to pay with a civil suit, then that entity is entitled to a trial, the FCC said. Attorneys have predicted (see 2407250030) that the courts will reject that process as satisfying the requirement for a jury trial because DOJ doesn’t pursue all or even most forfeitures, and has a five-year statute of limitations on taking up such matters. The agency also argued that its enforcement action involves “public rights,” which wouldn’t fall under SEC v. Jarkesy, though industry attorneys have argued that FCC issues don’t resemble those exceptions, which are matters such as regulation of foreign commerce or administration of public lands.

“FCC Commissioners should enforce existing precedent; it is not up to them to assess what a future court may someday decide, especially when it seeks to protect children,” Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society, emailed. He added that Carr’s “incantation, without further explanation, of the names of recent, inapplicable Supreme Court decisions” was an attempt to get attention and that Simington was “sincere, if misguided” in calling for the NOI. “The Commission majority fully and persuasively explained why the Supreme Court’s recent Jarkesy decision does not apply to the procedures the FCC enforces under the Communications Act.”

The FCC lacks the statutory authority to prosecute enforcement actions with jury trials, so a court finding that the Jarkesy decision applies to the FCC could block the agency from assessing monetary forfeitures, said DLA Piper partner and former FCC General Counsel Peter Karanjia at a CTIA-sponsored panel discussion in July (see 2407250030). Though Gray Television raised Jarkesy in a number of FCC and court proceedings (see 2409030046), Nexstar (see 2409030026), CTIA (see 2408060035) and others, courts have not ruled on the decision’s applicability to the FCC.

"We agree with Commissioner Carr that the FCC’s enforcement processes must be reformed, and with Commissioner Simington that the Commission’s authority to issue monetary penalties without a jury trial is unclear following recent Supreme Court precedent," said a Sinclair spokesperson. "By imposing unfounded, punitive fines on broadcasters for inadvertent, self-reported violations, today’s FCC sends the unmistakable message that it wants less, not more, children’s television programming available for free over the air.” "Unfortunately, today’s order is another example of why the FCC’s approach to enforcement in the broadcast context is in need of reform," said an NAB spokesperson. "The goal of the Commission’s enforcement program should be ongoing compliance with its rules. Hefty fines for inadvertent errors do not forward that goal."