The Court that day ruled that the FCC could have such a policy, but passed on whether the particular policy enacted (as well as the FCC's overall indecency policy) was constitutional, remanding that issue for further consideration. In July 2010, the United States Court of Appeals for the Second Circuit deemed the policy unconstitutionally vague, citing among other things the FCC's inconsistent standards between "bullshit" (deemed indecent) and "dickhead" (decent), which left broadcasters without sufficient notice as to what they could do.
Thursday morning, a unanimous Supreme Court struck down the FCC policy as unconstitutionally vague for not providing the networks with fair notice as to what was forbidden. (Justice Sotomayor recused, so it's 8-0.)
Basically, as Justice Kennedy explains, the FCC can't keep changing its mind about Andy Sipowicz's ass, or any of the other buttocks which appeared on NYPD Blue:
With respect to ABC, the Government with good reason does not argue no sanction was imposed. The fine against ABC and its network affiliates for the seven seconds of nudity was nearly $1.24 million. The Government argues instead that ABC had notice that the scene in NYPD Blue would be considered indecent in light of a 1960 decision where the Commission declared that the “televising of nudes might well raise a serious question of programming contrary to 18 U. S. C. §1464." This argument does not prevail. An isolated and ambiguous statement from a 1960 Commission decision does not suffice for the fair notice required when the Government intends to impose over a $1 million fine for allegedly impermissible speech. The Commission, furthermore, had released decisions before sanctioning ABC that declined to find isolated and brief moments of nudity actionably indecent. See, e.g., ... In re WPBN/ WTOM License Subsidiary, Inc., 15 FCC Rcd. 1838, 1840 (2000) (finding full frontal nudity in Schindler’s List not indecent). This is not to say, of course, that a graphic scene from Schindler’s List involving nude concentration camp prisoners is the same as the shower scene from NYPD Blue. It does show, however, that the Government can point to nothing that would have given ABC affirmative notice that its broadcast would be considered actionably indecent. It is likewise not sufficient for the Commission to assert, as it did in its order, that though “the depiction [of nudity] here is not as lengthy or repeated” as in some cases, the shower scene nonetheless “does contain more shots or lengthier depictions of nudity” than in other broadcasts found not indecent. This broad language fails to demonstrate that ABC had fair notice that its broadcast could be found indecent. In fact, a Commission ruling prior to the airing of the NYPD Blue episode had deemed 30 seconds of nude buttocks “very brief” and not actionably indecent in the context of the broadcast.What's important today is not just what the Court did—striking down the past fines—but what it didn't do. The Court again leaves for another day the question of whether the FCC's current indecency policy is constitutional, by holding only that the FCC's policy was unclear in the early aughts. Of note, however, Justice Ginsburg today became the second Justice to explicitly call into question whether broadcasters could be regulated at all, given technological advances, joining Justice Thomas' questioning the FCC's authority in the 2009 decision.