This is an example, `for line in fp` will raise UnicodeDecodeError:
#! -*- coding: utf-8 -*-
import codecs

text = u'\u6731' + u'\U0002a6a5' * 18
print repr(text)

with codecs.open('test.txt', 'wb', 'utf-16-le') as fp:
    fp.write(text)

with codecs.open('test.txt', 'rb', 'utf-16-le') as fp:
    print repr(fp.read())

with codecs.open('test.txt', 'rb', 'utf-16-le') as fp:
    for line in fp:
        print repr(line)

I read code in codecs.py:
    def read(self, size=-1, chars=-1, firstline=False):

        """ Decodes data from the stream self.stream and returns the
            resulting object.
...
            If firstline is true, and a UnicodeDecodeError happens
            after the first line terminator in the input only the first line
            will be returned, the rest of the input will be kept until the
            next call to read().

        """
...
            try:
                newchars, decodedbytes = self.decode(data, self.errors)
            except UnicodeDecodeError, exc:
                if firstline:
                    newchars, decodedbytes = self.decode(data[:exc.start], self.errors)
                    lines = newchars.splitlines(True)
                    if len(lines)<=1:
                        raise
                else:
                    raise
...

It seems that the firstline argument is not consistent with its doc description.
I don't konw why this argument was added and why lines count was checked.
If it was added for readline function to fix some decode errors, we may have no EOLs in data readed, so it caused UnicodeDecodeError too.
Maybe we should write code like below to support codecs readline.

    def read(self, size=-1, chars=-1, autotruncate=False):
...
            try:
                newchars, decodedbytes = self.decode(data, self.errors)
            except UnicodeDecodeError, exc:
                if autotruncate and exc.start:
                    newchars, decodedbytes = self.decode(data[:exc.start], self.errors)
                else:
                    raise
...