On April 17, 2025, the U.S. Court of Appeals for the Fifth Circuit issued an opinion, AT&T v. FCC, that will likely have broad implications for the ability of the FCC to assess forfeitures for violations of its regulations. The FCC had issued a forfeiture order of $57 million against AT&T for violating the FCC's customer proprietary network (CPNI) rules in connection with use of certain mobile customer location information. The Fifth Circuit vacated the FCC's forfeiture order and held that the FCC had violated Article III and the Seventh Amendment of the U.S. Constitution. Specifically, the Court found that the FCC's forfeiture proceedings were unconstitutional because they did not provide AT&T with the ability to be heard before an Article III court, such as a federal district court, and to have a trial by jury.

The Fifth Circuit's ruling applied the U.S. Supreme Court's 2024 holding in SEC v. Jarkesy.  Consistent with that holding, the Fifth Circuit found that the FCC's enforcement regime, with civil penalties for non-compliance, is a suit at common law and not remedial in nature. Therefore, the Seventh Amendment right to a jury trial and a right to a trial before an Article III court apply. Further, the Fifth Circuit found that the nature of the cause of action – AT&T's unreasonable failure to protect its customers' CPNI – is sufficiently similar to a common law action in negligence. The Court rejected the FCC's argument that its enforcement actions fall under the limited “public rights” exception to the Seventh Amendment, which permits certain administrative actions. Specifically, the Court disagreed with the FCC's argument that the “public rights” exception applies to regulation of common carriers.

The AT&T and Jarkesy cases have significant implications for the FCC's ability to enforce its regulations using civil penalties. Not only are the FCC's enforcement rules and regulations of questionable legality, but the statutory provisions for FCC enforcement – Subchapter V of the federal Communications Act – also may at risk of being held unconstitutional.

It is unclear what direction, if any, the FCC plans to take after AT&T. While it could seek review before the Supreme Court, FCC Chairman Carr may find path that politically unpalatable. It is also possible that the FCC would initiate a rulemaking proceeding to determine how, and under what procedures, it now may enforce its rules and regulations.