## Facts

- The FCC initiated an enforcement proceeding against New York Telephone Co. and New England Telephone & Telegraph Co., regulated local exchange carriers affiliated with NYNEX.
- The FCC alleged the companies violated rules governing transactions between regulated carriers and nonregulated affiliates, intended to prevent inflated affiliate charges from being passed to ratepayers.
- The FCC issued an Order to Show Cause proposing sanctions and extensive remedial measures (including refunds and rate adjustments).
- About eight months later, the FCC and the carriers entered a Consent Decree resolving the enforcement matter without prior public notice or an opportunity for comment; the carriers agreed to most terms in the Order to Show Cause, and the FCC agreed not to pursue further proceedings regarding the conduct.
- New York State consumer-protection entities, a competing carrier (Allnet), and an individual consumer advocate challenged the settlement and petitioned the FCC to reopen the proceeding, arguing procedural defects and inadequate protection for ratepayers.
- The FCC denied the petition to reopen and maintained the Consent Decree, and the petitioners sought review in the D.C. Circuit.

## Issues

1. Whether the FCC’s decision to settle an enforcement proceeding by consent decree and to deny reopening is judicially reviewable or largely committed to agency enforcement discretion.
2. Whether the FCC was required by the APA or the Communications Act to provide public notice and an opportunity for comment before concluding the enforcement action through a consent decree.
3. Whether the FCC acted arbitrarily or capriciously in refusing to reopen the concluded enforcement proceeding.

## Decision

- The court denied the petitions for review and left the Consent Decree in place.
- The court held the FCC’s settlement of the enforcement proceeding was a permissible exercise of enforcement discretion.
- The court held the Consent Decree was a case-specific enforcement resolution, not rulemaking requiring APA notice-and-comment procedures.
- The court held the FCC’s refusal to reopen was entitled to highly deferential review and was adequately explained and rational.

## Legal Principles

- Agencies have broad discretion to choose how to enforce statutes, including whether to settle enforcement actions, and courts generally defer absent clear statutory limits.
- A case-specific consent decree resolving an enforcement dispute is not legislative rulemaking and does not trigger APA notice-and-comment requirements merely because it may influence later cases.
- An agency’s refusal to reopen a concluded matter is reviewed under a highly deferential abuse-of-discretion/arbitrary-and-capricious standard and is upheld if the agency gives a rational explanation.
- The choice and adequacy of remedies in enforcement settlements are largely committed to agency judgment and expertise and will not be reweighed by courts absent legal error.

## Conclusion

The D.C. Circuit upheld the FCC’s authority to settle an affiliate-transaction enforcement case by consent decree without prior notice and comment and affirmed the FCC’s reasoned decision not to reopen the proceeding, deferring to the agency’s enforcement and remedial discretion.


N.Y. State Dep’t of Law v. FCC, 984 F.2d 1209 (D.C. Cir. 1993)