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The need for FCC enforcement reform was widely anticipated following the Supreme Court's June 2024 decision in SEC v. Jarkesy. In Jarkesy, the Court held that imposing civil penalties through agency enforcement proceedings for violations of agency antifraud rules that are similar to common law claims violates the right to a jury trial under the Seventh Amendment. The other shoe dropped when the Court of Appeals for the Fifth Circuit issued its April 2025 decision in AT&T v. FCC, a case involving an administrative enforcement proceeding in which the Commission imposed $57 million in civil penalties on the wireless provider for supposed negligence in safeguarding customers' location information. The Fifth Circuit applied Jarkesy and effectively determined that the FCC's enforcement regime is unconstitutional under the Seventh Amendment.
A glaring example of lack of advance notice and unfair surprise is the NAL for $4.5 million issued against voice provider Telnyx in February of this year. As described in the March Perspectives from FSF Scholars, "The FCC's Proposed Forfeiture Against Telnyx Raises Serious Rule of Law Concerns." In its enforcement proceeding against Telnyx, the Commission proposed civil penalties based on a sudden reinterpretation of a rule for preventing robocalls, from a rule that incorporated a flexibility standard to one based on strict liability. The agency's reinterpretation of the rule in the Telnyx proceeding came without advanced notice and constituted an unfair surprise. This clearly violated due process of law.
It should be emphasized that it would be an injustice for the pendency of the petition for rulemaking to be used as an excuse for the Commission to not promptly rescind the forfeiture penalties that it proposed against Telnyx. Similarly, a trio of forfeiture orders issued in April 2024 against AT&T, T-Mobile, and Verizon imposed a total of nearly $200 million in civil penalties based on novel interpretations of Section 222 of the Communications Act. The Biden FCC made those new interpretations in the course of enforcement proceedings and without advance notice to the wireless providers. In light of the Supreme Court's Jarkesy decision and the Fifth Circuit's AT&T v. FCC decision, along with the underlying defects in the legal reasoning used to impose the forfeitures, the Commission also should rescind the forfeitures against AT&T, T-Mobile, and Verizon without further delay.
Conformity to the Constitution's rule of law requirements should always be the most important guide for agency action, including regulatory reform efforts such as those which are the subject of the rulemaking petition. Without delaying recission of forfeitures that now appear to be unlawful, the Commission should open the requested rulemaking proceeding to adopt the types of reforms presented in the petition to make its enforcement regime fairer, less abusive, and more consistent with due process principles.
* Randolph J. May is President and Seth L. Cooper is Director of Policy Studies and a Senior Fellow of the Free State Foundation, a free market-oriented think tank in Potomac, MD. The views expressed in this Perspectives do not necessarily reflect the views of others on the staff of the Free State Foundation or those affiliated with it.
Read the full, complete Perspectives here.
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