At the end of its 2024 term, the Supreme Court decided two cases with a significant, if not historic, impact on the ability of federal agencies to regulate areas of the national economy within their jurisdiction, including the FCC’s ability to regulate telecommunications and Internet service providers. One of these cases, Loper Bright Enterprises v. Raimondo, significantly reduces the ability of federal agencies to promulgate new regulations, and the other of these cases, SEC v. Jarkesy, substantially reduces the ability of federal agencies to enforce existing federal statutes and regulations. All told, the Court delivered a powerful one-two punch to agency power.

In Loper Bright Enterprises, the Supreme Court ended almost forty years of judicial deference to agency decisions—or “Chevron deference”—a phrase referring to a 1984 Supreme Court decision captioned Chevron USA v. Natural Resources Defense Council that concerned ambiguity or silence in statutes. In the Chevron case, the Supreme Court ruled that where a statute is silent or ambiguous on a given issue, the courts should defer to agency decisions and expertise when it comes to statutory interpretation for concepts within the agency’s purview. The Court found that where a statute is ambiguous—and many of them are—if an agency’s interpretation is based on a “permissible” construction of the statute, the agency’s interpretation should govern. Or, put simply, federal agencies are best suited to make legal and policy decisions within the scope of their statutory mandate from Congress.

Chevron deference is a facially pro-agency standard but based on the philosophy that agencies are experts in their field and are staffed by specialists who work within a specific subset of the national economy (for example the communications industry) day in and day out. These experts in particular areas of the law and the economy are better suited to interpreting statutes and regulations governing these areas of the economy than federal judges, who review a wide variety of criminal and civil cases every day. So, until recently, when an ambiguous statute was subject to dispute, the scale tended to tip toward the agency’s view as to how it should be interpreted.

However, in its past term, the Supreme Court overruled Chevron deference in a case called Loper Bright Enterprises vs. Raimondo. In Loper Bright, the Supreme Court ruled that it is the judiciary’s responsibility to interpret statutes and to assess whether an agency acted within the scope of its statutory authority. The Court said that pursuant to the Administrative Procedure Act (APA), which empowers administrative agencies to promulgate rules and adjudicate cases, judges are tasked with determining the “best reading” of a statute, regardless of whether an agency has offered its opinion. And in that vein, the Court held that Chevron’s bias toward agency rather than judiciary statutory interpretation was inconsistent with the APA’s mandate.

In SEC v. Jarkesy, the Supreme Court cast not insignificant doubt on agencies’ ability to enforce their rules through administrative adjudications rather than full jury trials in federal district court. The narrow holding of Jarkesy was that the Securities and Exchange Commission (SEC)—despite the fact that Congress had given it a choice of venue between federal district court and an administrative tribunal in prosecuting fraud cases—could not bring such cases in administrative tribunals. Underlying the Court’s reasoning was the fact that fraud cases are common-law causes of action that have traditionally been litigated in court under the Seventh Amendment to the Constitution, guaranteeing the right to jury trial in civil actions.

While the FCC’s Enforcement Bureau does not enforce anti-fraud provisions, Jarkesy is significant because the Court went even further, holding that “If a suit is in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory.” Jarkesy did acknowledge “a class of cases concerning ‘public rights,’” which “historically could have been determined exclusively by [the executive and legislative] branches [and for which] no involvement by an Article III court in the initial adjudication ... is necessary.” The Court then detailed certain categories of cases that have been recognized as falling within the public rights exception including matters concerning the collection of revenue, aspects of customs law, immigration law, relations with Indian tribes, the administration of public lands, and the granting of public benefits. Having offered this exception, Jarkesy quickly narrowed it by stating “even with respect to matters that arguably fall within the scope of the ‘public rights’ doctrine, the presumption is in favor of Article III courts.”

AT&T, in a Fifth Circuit appeal of an FCC order seeking a $57 million forfeiture for the unauthorized release of customer location information has seized on the Jarkesy decision and challenged the FCC’s authority to assess forfeitures absent a trial by jury in federal district court. This case is still pending, but on the one hand, the Fifth Circuit could rule that enforcement of the FCC’s rules and regulations against FCC licensees and permittees fits comfortably within the public rights exemption because these parties are generally operating at the sufferance of the FCC. And, under the Communications Act, any entity that is subject to an FCC administrative fine or forfeiture has the right to a trial de novo in federal district court before the FCC can collect the fine or forfeiture. On the other hand, an FCC administrative tribunal is the entity that determines the fine or forfeiture in the “initial adjudication,” and the Supreme Court has indicated that there is a presumption in favor of judicial adjudications rather than administrative tribunals. The Fifth Circuit is expected to render a decision in early 2025 in AT&T v. FCC.

At the end of the day, 2024 will be remembered as the year in which the Supreme Court deprived federal agencies of significant rulemaking and enforcement powers. The results of that shift in power are unclear, but as we have seen in the Fifth Circuit, regulated entities—armed with this new judicial precedent—are unlikely to be shy in challenging agency power in the years to come.