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.