Enforcement Petition Raises Difficult Issues for FCC
A petition by major trade associations asking the FCC for a rulemaking on the commission's enforcement procedures, especially in light of the U.S. Supreme Court’s 2024 Jarkesy decision, raises interesting issues for the agency under Chairman Brendan Carr, industry experts told us. The groups on the petition are CTIA, the Competitive Carriers Association, NCTA, USTelecom and the Wireless Infrastructure Association (see 2505010058). Experts said they’re watching closely what the FCC does next.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
“In recent years … due process principles have been in short supply across the Commission’s enforcement process,” the petition said. Jarkesy "renders the Commission’s current enforcement process unconstitutional, as the decision clearly indicates that it violates the Seventh Amendment right to a jury trial for the Commission to impose civil monetary penalties through its in-house enforcement process." The petition also noted the 5th U.S. Circuit Court of Appeals’ ruling overturning an AT&T data fine (see 2504180021).
Also last week, Carr reiterated the FCC’s disagreement with the 5th Circuit decision, which said the agency’s authority to issue monetary forfeitures was unconstitutional (see 2504280038). The FCC also defended a data fine against Verizon in the 2nd Circuit, arguing that the agency had properly handed down the penalty and that the 5th Circuit decision was in error (see 2504290060).
D.C. Circuit judges heard T-Mobile’s challenge of similar fines in March and appeared skeptical of arguments that the penalty should be overturned, but they have yet to issue a decision (see 2503240048).
“It will be telling if Carr puts this out on public notice and if so, when,” said a lawyer with wireless and wireline clients.
Basing FCC action on the premise that the system is unconstitutional is “premature,” said Andrew Schwartzman, Benton Institute for Broadband & Society's senior counselor. “It is at least possible, and I would say likely, that one or both of the other two circuits considering the Jarkesy issue will go the other way, and that the matter could go to the Supreme Court,” he said in an email.
The FCC perhaps should act on some changes the industry proposes, independent of what happens in court, Schwartzman added. “Some relatively small tweaks to improve accountability and reduce uncertainty might well be in order,” he said: “But the wholesale revisions called for in the petition will benefit the telecommunications industry at the expense of the public, which is entitled to protection against those who break the rules.”
The D.C. Circuit and 2nd Circuit oral arguments seemed to go well for the FCC, said Public Knowledge Senior Vice President Harold Feld. Carriers should be careful what they ask for: If the FCC limits enforcement, “we can expect to see cellphone jammers everywhere,” he said. “I'm not sure CTIA would be as happy as they think they would be with a toothless FCC.”
Joe Kane, director-broadband and spectrum policy at the Information Technology and Innovation Foundation, said it may make sense for Carr to seek comment on the petition “even while defending the scope of the agency's current position in court to try to find an equilibrium.”
Uncertainty remains “about how Jarkesy applies across different cases and agencies, and that's what we're seeing being worked out both in the FCC's cases in court and a potential rulemaking to reform FCC enforcement,” Kane said. The FCC, regulated companies and the public “have a strong interest in consistent and fair enforcement that complies with the Constitution,” he said: “That's true generally regardless of the procedural arguments in a particular case under some now-unsettled law.”
Kristian Stout, director-innovation policy at the International Center for Law & Economics, said industry may view this as “an opportune time to suggest further reforms to the FCC’s process with a commission that may be sympathetic to improving the FCC’s enforcement procedures.”
Summit Ridge Group President Armand Musey said via email that because Congress has outsourced a lot of government activity to agencies, including the FCC, "the agencies have taken on a life of their own,” and “this was bound to come up eventually.” It’s not clear why the associations are seeking a rulemaking now, he said. “Having greater regulatory certainty is definitely in their carrier members’ interest, and seems to align with some of Chairman Carr's publicly stated views.”