Editing Federal Radio Commission (section)

====Legal challenges====
[[File:Radio station WJAZ, Chicago, 'wave pirates' publicity photograph (1926).jpg|thumb|300px|right|In 1926, station WJAZ successfully challenged the government's authority to assign transmitting frequencies under the Radio Act of 1912.<ref>[https://www.worldradiohistory.com/Archive-Popular-Radio/Popular-Radio-1926-05.pdf#page=90 WJAZ "wave pirates" publicity photograph], ''Popular Radio'', May 1926, page 90.</ref>]]

During his tenure Hoover was aware that some of his actions were on shaky legal ground, given the limited powers assigned to him by the 1912 Act. In particular, in 1921 the department had tried to refuse to issue a renewal license to a point-to-point radiotelegraph station in New York City, operated by the Intercity Radio Company, on the grounds that it was causing excessive interference to earlier radiotelegraph stations operating nearby. Intercity appealed, and in 1923 the Court of Appeals of the District of Columbia sided with Intercity, stating the 1912 Act did not provide for licensing decisions at "the discretion of an executive officer". The Department of Commerce planned to request a review by the Supreme Court, but the case was rendered moot when Intercity decided to shut down the New York City station. Still, it had raised significant questions about the extent of Hoover's authority.<ref>[https://babel.hathitrust.org/cgi/pt?id=wu.89090520677&view=1up&seq=55 Intercity Radio Company case], ''The Law of Radio Communication'' by Stephen Davis, 1927, page 37.</ref>

A second, ultimately successful, challenge occurred in 1926. The [[Zenith Electronics|Zenith Radio Corporation]] in late 1925 established a high-powered radio station, [[WJAZ (Chicago)|WJAZ]], with a transmitter site outside Chicago, Illinois. After being informed that there might not be an available frequency for the station to use, company president E. F. McDonald proposed that, because they only wanted to broadcast two hours a week, they would be happy with an assignment on 930&nbsp;kHz that was limited to 10:00&nbsp;p.m. to midnight Central time on Thursday nights, when the only other station on the frequency, [[KOA (AM)|KOA]] in Denver, Colorado, was normally off the air. Despite McDonald's initial expression of satisfaction with a schedule of just two hours per week, his tone soon changed. At this time the United States had an informal agreement with Canada that six designated AM band frequencies would be used exclusively by Canadian stations. In early January 1926, McDonald directed WJAZ to move from its 930&nbsp;kHz assignment to 910&nbsp;kHz, one of the restricted Canadian frequencies, and begin expanded hours of operation.<ref>''The Beginning of Broadcast Regulation in the Twentieth Century'' by Marvin R. Bensman, 2000, pages 159-160.</ref>

Invoking the Intercity Radio Company case rulings, Zenith ignored the Commerce Department's order to return WJAZ to its assigned frequency. On January 20, 1926, a federal court suit, ''United States versus Zenith Radio Corporation and E. F. McDonald'', was filed in Chicago. McDonald expected a narrow ruling in his favor, claiming that only a small number of stations, including WJAZ, held the "Class D Developmental" licenses that were free from normal restrictions. However, the actual outcome was sweeping. On April 16, 1926, Judge [[James Herbert Wilkerson|James H. Wilkerson]]'s ruling stated that, under the 1912 Act, the Commerce Department in fact could not limit the number of broadcasting licenses issued, or designate station frequencies. The government reviewed whether to try to appeal this decision, but Acting Attorney General William J. Donovan's analysis concurred with the court's decision.<ref>[https://babel.hathitrust.org/cgi/pt?id=mdp.39015051148388&view=1up&seq=182 "Federal Regulation of Radio Broadcasting"] (July 8, 1926) by Acting Attorney General William J. Donovan, ''Official Opinions of the Attorneys General of the United States'', Volume 35, 1929, pages 126-132.</ref>

The immediate result was that, until Congress passed new legislation, the Commerce Department could not limit the number of new broadcasting stations, which were now free to operate on any frequency and use any power they wished. Many stations showed restraint, while others took the opportunity to increase powers and move to new frequencies (derisively called "wave jumping"). The extent to which this new environment resulted in disruption for the average listener is difficult to judge, but the term "chaos" started to appear in discussions.<ref>[https://chroniclingamerica.loc.gov/lccn/sn83045462/1927-04-22/ed-1/seq-2/ "Radio Chaos to End Tomorrow Night"], ''Washington (D.C.) Evening Star'', April 22, 1927, page 2.</ref>