Future of FCC Enforcement in Question as SCOTUS Takes Up Data Privacy Case
How the U.S. Supreme Court will view the appeal of the FCC data fine case remains unclear, and it could be a close decision for the court, industry experts said Monday. Justices agreed Friday to hear FCC v. AT&T and address a split in the judicial circuits (see 2601090067). The fines were handed down in the last administration and opposed by FCC Republicans at the time, but the Trump administration wants SCOTUS to uphold the penalties and preserve the agency's enforcement mechanisms.
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Keller & Heckman warned clients Monday that if SCOTUS finds that the way the FCC handed down the fines was unconstitutional, “it would remove the Commission’s primary enforcement mechanism.”
The U.S. Court of Appeals for the 2nd Circuit in September upheld a fine against Verizon for violating FCC data privacy rules. In August, the D.C. Circuit upheld a similar fine against T-Mobile (see 2508150044), while the 5th Circuit rejected a fine imposed on AT&T earlier last year (see 2504180001). The appellate courts decided differently on the implications of SEC v. Jarkesy, a 2024 case where justices found that when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial, and the agency must bring the action in a federal court.
The outcome of the FCC case is hard to predict, said Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society. The trend of the court “would seem to favor a rejection of the government's position,” but there are “crucial distinctions between the enforcement regimes of the FCC and the SEC, and it would not be hard to write a decision based on that.”
Schwartzman added that the 5th Circuit decision doesn’t provide a “helpful blueprint for ruling against the government.” A “central premise” of its ruling was “undermined” by SCOTUS’ decision in McLaughlin Chiropractic Associates v. McKesson, which examined lower court reviews of agency decisions.
Joe Kane, the Information Technology and Innovation Foundation's director of broadband and spectrum policy, said it was “inevitable” that the court would need to “work out the implications of Jarkesy for other agencies that issue fines, and the FCC system is similar enough to likely raise the eyebrows of the justices that were in the Jarkesy majority.”
But there are also procedural differences in the FCC system “that could provide grounds to distinguish it from the SEC,” Kane said. The main thing to watch during oral argument is whether justices “treat the differences as cosmetic or substantive in a way that makes a constitutional difference.”
Free State Foundation President Randolph May noted that SCOTUS has “steadily curbed the power of administrative agencies by employing various originalist theories of constitutional interpretation, especially in conjunction with a stricter view of [the] separation of powers doctrine.” Wireless carriers likely have a good chance of winning, he said in an email. But applying Jarkesy to the FCC’s forfeiture process “could have implications for other agencies that impose fines,” which may “give the Court pause, or at least cause it to look for ways to confine its ruling in some way.”
The FCC may have trouble defending the fines, predicted Kristian Stout, innovation policy director at the International Center for Law & Economics. Stout said he thinks it's most likely that the court will tighten “the constraints around FCC forfeitures” and require “more meaningful judicial process before money changes hands.”