Supreme Court Weighs FCC Penalty Powers

The Supreme Court seemed wary of limiting the power of federal regulators on Tuesday in a case over multimillion-dollar penalties levied against the telecommunications giants Verizon and AT&T.

The  companies appealed to the justices after the Federal Communications Commission found they sold customers' location data without proper safeguards. The FCC slapped the companies with penalties totaling over $100 million.

The telecom companies challenged the process as unconstitutional because it gives them little opportunity to tell their side of the story in court. Key justices seemed skeptical, however.

"I wonder if, at the end of the day, you're really just talking about a PR problem," Chief Justice John Roberts said during arguments Tuesday.

The Trump administration defended the process as an essential regulatory tool and argued that it does leave a path to court.

But the government also said companies don't have to pay penalties right away, a concession that amounts to a win for the companies, Justice Brett Kavanaugh said.

"It seems like you've won on the law going forward one way or the other," Kavanaugh told an attorney for AT&T and Verizon.

The Supreme Court's conservative majority has limited the power of federal agencies before, including overturning a decades-old decision that had given regulators an advantage in court and stripping another agency of a major tool in fighting securities fraud.

A victory for AT&T and Verizon in this case could have widespread effects for other agencies that use similar enforcement mechanisms, advocates said.

Companies that get notices that they've run afoul of FCC regulations now have two options: pay the penalty and then contest it before an appeals court or refuse to pay and wait for a federal lawsuit that could eventually go before a jury.

Doug Orvis, a veteran telecom attorney, said neither option is viable, so most companies pay the penalty.

A ruling is expected by late June.