Reign in Current Enforcement Bureau, Carr Says, as He Blasts Wheeler's Bureau

The panel discussion examined proposals from Wiley partner and former FCC General Counsel Tom Johnson’s white paper on changes to the Enforcement Bureau (see 2401290075). The FCC should curb EB practices such as unreasonable document requests and huge fines to avoid the costly litigation and legal challenges to the agency’s structure that will likely be enabled by recent SCOTUS decisions such as Axon v. FTC and SEC v. Cochran, and the pending Jarkesy v. SEC, Johnson said. Those decisions could allow targets of FCC enforcement actions to "launch a collateral attack during the course of an agency investigation, raising constitutional challenges to the agency's existence or structure,” Johnson said.

Carr said at the event that the Rosenworcel-led EB has overreached just twice, on a recent conditional approval of Mission Broadcasting’s proposed buy of WADL Detroit (see 2404240070) and on a forfeiture against wireless carriers over safeguards for location data (see 2404290044). In contrast, there was a need for “fundamental reform” of the agency’s enforcement practices when Wheeler was in charge “because of the scope and scale of the overreaching and abuse I saw under the Wheeler FCC,” Carr said. He later pointed to enforcement actions against M.C. Dean over Wi-Fi blocking, against TerraCom and YourTel in 2014 on protecting personal information, and a 2015 notice of apparent liability against AT&T Mobility about data plan transparency as examples of EB overreach under Wheeler. The current EB “hasn’t gone as far, yet,” he said. “Hopefully this version of the Enforcement Bureau will continue to try to hew more closely to the law.” Wheeler, the Enforcement Bureau and the FCC didn’t comment.

Carr said the FCC should “trim its sails” on enforcement to avoid drawing legal challenges to the agency’s constitutionality. “The more we push the boundaries of our own existing enforcement authority, we're gonna hasten the day when very significant constitutional challenges to the entire scheme will be brought forward,” Carr said.

Having a bureau entirely dedicated to enforcement leads to a focus on bringing enforcement actions, Johnson said. The original intent of the EB was challenging clear violations of FCC rules, “not settling disputes about the meaning of unclear regulations,” said HWG partner and former FCC General Counsel Christopher Wright, who was at the agency when the EB was formed in 1999. The FCC should clarify its rules to prevent inadvertent violations and give notice to regulatees, Wright said. In addition, Wright criticized the EB for setting “wildly” large forfeiture amounts as a way of forcing settlements. He called that practice “abusive.” The bureau also frequently makes large document requests with short deadlines in its letters of inquiry, forcing parties to request extensions of those deadlines or face further violations, Johnson said. In exchange for LOI deadline extensions, the bureau will frequently require a target to agree to “toll,” or pause, the statute of limitations on a violation. This lets the EB go after violations long after they occur, Johnson said.

The EB follows the direction of the chair -- its decisions are appealed to the full FCC and the chair decides whether cases should be referred to the administrative law judge. So the agency is at once “judge, jury and executioner,” Carr said. The FCC stands out among federal agencies in having few checks on its enforcement power, Johnson argued. Unlike similar subpoena-like issuances from agencies like the FTC and SEC, FCC letters of inquiry can’t be appealed under current law. Johnson said the recent SCOTUS administrative law decisions in Axon and Cochran could allow entities to take an LOI directly to the courts. Johnson said that hasn’t happened because parties are still trying to assess “the rules of the road.” He added, “I think regulated parties will start making use of this.”

Johnson and Carr said they believe the FCC will try to get ahead of collateral legal challenges to agency authority. Johnson said that agency orders increasingly don’t reference Chevron U.S.A., Inc. v. Natural Resources Defense Council in recognition that SCOTUS appears poised to do away with the doctrine of Chevron deference. Agencies assess the risk that a court challenge could remove a portion of their authority, Carr said. As that risk increases, “going to 11” with a decision is a less attractive option, he said. “As these cases percolate, maybe that risk analysis is shifting at agencies.”