UPDATE 3-Top US court to review FCC indecency rule case

(Be advised that this story contains language in paragraph 4 that may be offensive to some readers; adds FCC chairman's remarks, paragraphs 8-9)

By Peter Kaplan

WASHINGTON, March 17 (Reuters) - The U.S. Supreme Court said on Monday it would take up the issue of foul language on the airwaves for the first time in 30 years, agreeing to review a ruling that undercut the way regulators define indecency on television.

The high court agreed to hear an appeal by the FCC, which is seeking to reaffirm its authority to declare a single "fleeting" utterance in violation of its indecency rules.

The FCC appealed to the high court in an effort to overturn a June 4 ruling by the Court of Appeals for the Second Circuit in New York, which found that the agency had failed to justify its standard for "fleeting" indecency.

The case stemmed from an FCC ruling in March of 2006, in which the agency found News Corp's (NWSa.N: Quote, Profile, Research) Fox television network violated decency rules when singer Cher blurted "fuck" during the 2002 Billboard Music Awards broadcast and actress Nicole Richie used a variation of that word and "shit" during the 2003 awards.

No fines were imposed. But Fox challenged the decision in court, arguing that the government's decency standard was unclear, violated free-speech protections and that the rulings had contradicted earlier findings.

The appeals court sided with Fox, saying the FCC had "failed to articulate a reasoned basis" for its "fleeting" indecency standard and expressed skepticism about whether the courts would find it constitutional. It sent the matter back to the agency for further consideration.

The FCC said in its appeal to the high court that the appellate ruling should be reversed as it conflicted with a past Supreme Court ruling and is "inconsistent with settled principles governing judicial review of agency action."