On April 17, the U.S. Court of Appeals for the Fifth Circuit ruled that the FCC doesn’t have the authority to levy fines. The case under appeal came from an AT&T fine issued by the FCC in 2024 against the company for violating customer privacy by selling customer location data. AT&T appealed the FCC ruling and said that the FCC had violated the Seventh Amendment of the Constitution by not allowing AT&T to have a jury trial.
The Fifth Circuit sided with the AT&T appeal and said that the FCC had acted as prosecutor, judge, and jury in deciding that AT&T had broken the rules and in setting the fine.
The Court ruling was not particularly kind to AT&T and is worth a read. The Court recounted the facts of the case and said that AT&T was, at a minimum, guilty of negligence since it assumed that those who purchased its location data would protect consumer’s privacy rights.
The Court’s opinion relies in the 2023 Supreme Court Decision in SEC v Jarkesy that ruled that the SEC had no authority to levy civil fines. Since then, many lawyers have assumed that the ruling would apply broadly to all federal agencies, and this ruling affirms that opinion. The two cases together seem to affirm the inability of federal agencies to fine the companies they regulate.
This ruling will stand unless the FCC appeals it. FCC Commissioner Brendan Carr and Commissioner Nathan Simington both objected to the original fines against AT&T. However, the FCC has issued fines since 2023 against others, including a $4.5 million fine levied this year against Telnyx LLC related to making imposter robocalls leading up to last year’s elections. The FCC already wrote a letter to other courts that are reviewing cases involving FCC fines and asked those courts not automatically follow this decision.
The case also brought into question the process by which the FCC decides that its rules have been broken. The Court found that the FCC had essentially judged AT&T as guilty without giving the company the chance to defend itself. This might mean that the FCC and other regulatory agencies will be limited to gathering facts and forwarding cases to the DOJ without making any findings of wrongdoing. I don’t want this to sound like an overexaggeration but that philosophy seems like it would largely take the FCC out of the regulatory business. It would mean that the agency can set rules but can’t decide that a regulated company has broken its rules, since doing so would be a finding of wrongdoing without a trial.
I’m not a lawyer, and there are nuances to this ruling that I am probably missing. But this doesn’t seem to bode well for the FCC and many other regulatory agencies. The ruling would seem to curtail the ability of Chairman Carr to pursue a lot of the topics on his 2025 wish list.
Interestingly, Verizon has a similar case that being heard in the Second Circuit Court where the judges seem to think that the FCC has the right to fine the carriers. This might have to eventually make it to the Supreme Court if there are different rulings.
Does that now mean that carriers can essentially break the rules and regulations set by the FCC, and not have to pay any fines? Let’s hope someone somewhere
I agree with this. It has consequences. However, I have certain rights and if the government doesn’t have an administrative rule to fix violations then I have a right to use the court system. It might not seem obvious, but this removes the FCC from ‘arbitration’ and so requires that courts take cases.
So, if I find someone illegally interfering with my service, I can find them and sue them directly. Before I had to ask the FCC to fine them. I *must* be allowed a legal remedy. The FCC was there, courts would defer, and then nothing would happen.
… comes up with a better plan to protect customers!