## Facts

- The FCC issued two forfeiture orders totaling $80,000 against AT&T for “slamming,” i.e., changing customers’ long-distance service without authorization.
- The forfeitures arose from two telemarketing-driven carrier changes in which AT&T used an independent third-party verifier and collected identifying information consistent with FCC verification rules.
- The FCC determined that the individuals who approved the changes were not the actual subscribers for the telephone lines and that the actual subscribers had not authorized the switches.
- Although AT&T had followed the prescribed third-party verification process, the FCC concluded AT&T violated 47 U.S.C. § 258 and related anti-slamming rules because valid authorization from the actual subscriber was lacking.
- AT&T paid the forfeitures and then petitioned for judicial review under 47 U.S.C. § 402, challenging both jurisdiction (given payment) and the FCC’s interpretation of § 258 and its rules.

## Issues

1. Whether a court of appeals has jurisdiction to review an FCC forfeiture order after the carrier has paid the forfeiture.
2. Whether § 258 authorizes the FCC, through enforcement of its verification rules, to require carriers to guarantee that the actual line subscriber authorized a carrier change, even when the carrier complied with the Commission’s prescribed verification procedures.

## Decision

- The court held it had jurisdiction to hear AT&T’s petition despite AT&T’s payment of the forfeiture.
- The court held the FCC exceeded its statutory authority by effectively converting compliance with prescribed verification procedures into a requirement that carriers guarantee actual-subscriber authorization.
- The court vacated the relevant portions of the FCC’s forfeiture orders.

## Legal Principles

- Payment of an administrative forfeiture does not necessarily moot or waive a timely petition for judicial review where the statute provides for review and the payment is treated as post-compliance rather than relinquishment of review rights.
- Under § 258, the FCC may prescribe verification procedures to prevent unauthorized carrier changes, but it may not impose strict liability by requiring carriers to guarantee the ultimate fact of actual-subscriber consent beyond those procedures.
- An agency may not expand a statutory grant focused on “procedures” into an open-ended substantive obligation that makes regulated parties liable even when they have complied with the prescribed procedural safeguards.

## Conclusion

The D.C. Circuit allowed review of a forfeiture after payment and held that § 258 limits the FCC to prescribing and enforcing verification procedures; the Commission could not penalize AT&T on a theory that carriers must guarantee that the actual line subscriber authorized the change when AT&T complied with the verification process.


AT&T Corp. v. FCC, 323 F.3d 1081 (D.C. Cir. 2003)