On April 17, 2025, the U.S. Court of Appeals for the Fifth Circuit vacated a $57 million forfeiture order issued by the FCC against AT&T, ruling that the FCC violated the Constitution by imposing the penalty without first bringing the case to a federal court. The decision in AT&T v. FCC could significantly alter the FCC’s ability to impose monetary penalties through its internal enforcement process, and it may signal a broader judicial rethinking of administrative enforcement powers across federal agencies.
The central question in AT&T was whether the FCC could lawfully impose a forfeiture penalty under its consumer privacy rules without first securing a judgment from a federal court. The Fifth Circuit answered in the negative, holding that AT&T was entitled to have the case heard by a jury in a federal court, rather than resolved solely through the FCC’s internal processes. The Fifth Circuit’s analysis heavily relies on the Supreme Court’s reasoning in Jarkesy v. SEC, where it held that the imposition of civil penalties for securities fraud by the SEC without a jury trial violates the Seventh Amendment.
The FCC argued that, because AT&T is a common carrier and is therefore “affected with a public interest,” the forfeiture order fell within the “public rights” exception, which is a doctrine allowing an administrative agency to resolve certain matters internally, rather than in the courts, if they involve “public rights” instead of private ones. Under longstanding constitutional principles, claims involving private rights, such as disputes over property, contracts, or liability between the government and a private party, must generally be resolved in the courts. By contrast, public rights involve matters that historically have been determined by the executive or legislative branches, such as revenue collection, foreign commerce, immigration, tariffs, public lands, and patents. In AT&T, the Fifth Circuit concluded that the FCC’s attempt to impose its penalty against AT&T resembled the former, not the latter.
The court rejected the FCC’s “common carrier” argument, reasoning that the “public rights exception” is a narrow one, and a presumption therefore exists in favor of a “private rights” determination. Deciding otherwise, the court explained, “would blow a hole in what is meant to be a narrow exception” because “[m]yriad enterprises might be said to implicate the ‘public interest.’”
The Fifth Circuit also addressed a procedural argument under Section 504 of the Communications Act, which permits the DOJ to recover a forfeiture imposed by the FCC in federal court if the alleged violator refuses to pay the FCC. The Commission argued that this proceeding satisfies the Seventh Amendment because Section 504 provides for a “trial de novo,” or a fresh judicial look at the matter. But the Fifth Circuit was unconvinced, explaining that in a Section 504 trial in the Fifth Circuit, the court is prohibited from considering the defendant’s legal arguments and may consider only the factual basis for the enforcement action. The court described Section 504 as a “back-end” trial that offers little protection against reputational harm or the risk of future enhanced penalties based on an FCC finding that may later be overturned — all before the licensee ever reaches a courtroom.
While the public rights doctrine has traditionally allowed an agency to resolve certain matters internally, the Fifth Circuit’s decision leaves the FCC, and other agencies, facing uncertainty about how far it can go without involving federal courts. One open question is whether courts will begin parsing agency enforcement actions, permitting an agency to resolve certain matters internally, such as licensing violations, only if the matter is sufficiently removed from a “suit at common law” and therefore not subject to Seventh Amendment protections. Another question is how the Fifth Circuit’s decision might affect the FCC’s ability to pursue enforcement actions against other types of FCC-regulated entities, particularly in areas involving the licensing of public spectrum, such as wireless and broadcast services. But the issue is far from settled. A nearly identical case involving T-Mobile is currently pending in the D.C. Circuit. The D.C. Circuit could reach a different conclusion than the Fifth, which would set up a circuit split that would increase the likelihood of Supreme Court review.
If the Fifth Circuit’s logic gains traction in other circuits or is affirmed by the Supreme Court, the FCC may need to fundamentally adjust how it pursues enforcement. Instead of resolving forfeitures in-house, the FCC could be forced to bring those claims to a district court, a shift that would increase the cost and complexity of enforcement and may lead the FCC to be more selective in the types of violations it chooses to pursue. Of course, the increased cost and complexity would also burden regulated entities facing FCC enforcement.
The AT&T decision may not be the last word, but it does offer a clear signal: the courts are not automatically deferring to administrative structures that bypass the judiciary when private rights and financial penalties are involved.
As always, feel free to reach out to an FHH attorney with any questions about how this decision may affect your compliance obligations or interactions with the FCC.
