The FCC Should Rescind the Telnyx Forfeiture Now

I was pleased to see the report in today's Communications Daily [subscription required] that Telnyx, which is contesting a $4.5 million forfeiture proposed by the FCC, has been reinstated in good standing by the Industry Traceback Group (ITG). ITG, established by USTelecom, works collaboratively with voice service providers to combat illegal calls by tracing them back to their origin.

 

A Free State Foundation Perspectives, published March 12, 2025, explained in detail why the FCC's proposed forfeiture, based on a claim that Telnyx failed to satisfy the agency's "Effective Measures" rule for blocking illegal calls, raises serious rule of law concerns implicating fundamental due process and fair notice constraints. As the FSF Perspectives states: "This is because it appears Telnyx, and other providers for that matter, could not have known in advance the requirements of the rule Telnyx is charged with violating."

 

In this instance, if not rescinded, the proposed forfeiture, in effect, would transform the "Effective Measures" rule by imposing more stringent yet unspecified requirements and a higher liability standard than that which the Commission previously established through notice-and-comment rulemakings. As such, the FCC's proposed forfeiture smacks of "regulation by enforcement." This is because regulated entities are deprived of the ability to know and follow the law, contrary to the requirement of fair notice and the prohibition of unfair surprise that are recognized in Supreme Court's Fifth Amendment Due Process Clause jurisprudence.

 

 

As the FSF Perspectives observed:

 

These due process concerns are at the core of President Trump's newly reinstated Executive Order 13892 – "Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication." The very first sentence reads: "Regulated parties must know in advance the rules by which the Federal Government will judge their actions." The EO goes on to declare that regulated entities should not be subjected to a civil administrative enforcement action or adjudication absent prior public notice of "the legal standards applicable to that conduct." Indeed, the EO directs that agencies "shall afford regulated parties the safeguards described in this order, above and beyond those that the courts have interpreted the Due Process Clause of the Fifth Amendment to the Constitution to impose."

Indeed, considering its vagueness and open-endedness, the FCC itself should "DELETE" the "Effective Measures" rule that Telnyx is claimed to have violated. In accordance with President Trump's April 9 Presidential Memorandum, "Directing the Repeal of Unlawful Regulations," this likely unlawful rule, which inherently invites abuse on the basis of lack of due process and fair notice, should be repealed on the agency's own initiative.

 

In the meantime, and more immediately, the FCC should act now to rescind the proposed Telenyx forfeiture. Hopefully, ITG's reinstatement is a positive indication in that regard.

PRESS RELEASE: Eleventh Circuit's Vacation of Gray Television's Forfeiture Should Raise Caution Flags at FCC

Free State Foundation President Randolph May issued the following statement regarding the Court of Appeals for the Eleventh Circuit's opinion today vacating a forfeiture penalty of $518,283 assessed against Gray Television, Inc: 

The Free State Foundation filed an amicus brief in Gray Television's appeal of its forfeiture because of certain concerns relating the FCC's rationale for imposing the forfeiture, including whether Gray's due process rights had been violated for lack of fair notice regarding whether Gray's conduct actually violated the Commission's rules as they had been interpreted. While the court did not address the specific points FCC raised, it did hold that the entire
forfeiture should be vacated because the Commission failed to provide fair notice and acted arbitrarily and capriciously in failing to explain the basis for its Notice of Apparent Liability (NAL).

 

The FCC's enforcement regime has been plagued by problematic examples of overreach and abuse in the past, which is a major reason why FSF participated as an amicus in the Gray appeal. Before the agency is allowed to impose massive penalties, it's required as a matter of due process that parties regulated by the agency have fair notice of what's expected of them to comply with Commission rules. Conservatives and rule-of-law advocates have always been rightly concerned by "regulation by enforcement" – that is using an enforcement regime to establish new heretofore unknowable regulatory requirements.

 

The FCC's recent imposition of a massive forfeiture on Telnyx, and others, may well fall into this category, raising similar due process and fair notice concerns regarding whether the conduct alleged to be violative of the agency’s rules was known or knowable.