Earlier this year the United States Court of Appeals for the D.C. Circuit issued its long-awaited decision in Comcast Corporation v. FCC. “In this case,” the Court said, “we must decide whether the Federal Communications Commission has the authority to regulate an Internet service provider’s network management practices.”
It was an important question and the Court scrupulously addressed it in a detailed legal analysis. The Court noted that the FCC did not itself claim express statutory authority for such regulation and rejected the FCC’s argument that it possessed ancillary authority. The Court thus held that the FCC lacked the authority to regulate the network management practices of Internet service providers.
The question of FCC authority or “jurisdiction” presents a potentially complicated legal issue. Following the D.C. Circuit’s decision, Professor David Post offered helpful background and concise analysis. Professor Post observed that “telecommunications law is, generally speaking, not for the faint of heart. The Communications Act, and its 1996 successor the Telecomm Reform Act of 1996, set forth as complicated a statutory regime as can be imagined — added on to which are the numerous FCC interpretive actions (sometimes contradictory of one another), court interpretations of agency interpretations, and on and on.” Professor Post suggested the limits of the Court’s analysis and decision in the case.
When the FCC appeared in the D.C. Circuit to defend its order against Comcast, it had every incentive to cite whatever legal authority supported its exercise of power over Comcast as an Internet service provider. It failed to persuade the Court that it possessed the authority it claimed. The Court rejected its argument of ancillary authority under the relevant statutes.
Within a matter of months of the D.C.Circuit decision, however, the FCC claims to have discovered sources of authority that it overlooked when it appeared before the D.C. Circuit. It now claims express statutory authority to regulate the management practices of Internet service providers, and has proceeded to promulgate a regulation doing so. The FCC report and order promulgating the regulation is posted here (the regulation itself is set forth in Appendix A). The FCC’s discussion of its authority to promulgate the regulation is at pages 62-82, beginning at paragraph 115.
I have no expertise to comment on the merits of the FCC’s new analysis of its authority. On its face, however, this seems like an amazing turn of events. If a private party proceeded to act in defiance of a freshly minted Court decision regarding the party’s authority to act in a certain way, I am confident that the Court would not be amused. As a federal administrative agency, the FCC has standing that private parties lack to reinterpret its own authority. At the least, however, it seems funny that the FCC overlooked the statutory authority that it now cites to support its regulation when it appeared before the D.C. Circuit earlier this year to defend the order it had issued to Comcast. It appears that the agency is out of control.
The FCC adopted the ISP regulation by vote of 3-2, with the Commission’s two Republican members dissenting. They both took to newspaper op-ed pages to protest the FCC’s action. Commissioner Meredith Attwell Baker commented in a Washington Post column. Commissioner Robert McDowell commented in a Wall Street Journal column.
Commissioner Baker questioned the wisdom of the FCC regulation. Commissioner McDowell expressly addressed the remarkable background of the Commission’s exercise of its authority in the second half of his column. The discussion was easy to miss and yet particularly worthy of attention, as it supports the thought that the FCC is out of control:
Last year, FCC Chairman Julius Genachowski started to fulfill this [Obama campaign] promise [of Internet regulation] by proposing rules using a legal theory from an earlier commission decision (from which I had dissented in 2008) that was under court review. So confident were they in their case, FCC lawyers told the federal court of appeals in Washington, D.C., that their theory gave the agency the authority to regulate broadband rates, even though Congress has never given the FCC the power to regulate the Internet. FCC leaders seemed caught off guard by the extent of the court’s April 6 rebuke of the commission’s regulatory overreach [in Comcast Corporation v. FCC].
In May, the FCC leadership floated the idea of deeming complex and dynamic Internet services equivalent to old-fashioned monopoly phone services, thereby triggering price-and-terms regulations that originated in the 1880s. The announcement produced what has become a rare event in Washington: A large, bipartisan majority of Congress agreeing on something. More than 300 members of Congress, including 86 Democrats, contacted the FCC to implore it to stop pursuing Internet regulation and to defer to Capitol Hill.
Facing a powerful congressional backlash, the FCC temporarily changed tack and convened negotiations over the summer with a select group of industry representatives and proponents of Internet regulation. Curiously, the commission abruptly dissolved the talks after Google and Verizon, former Internet-policy rivals, announced their own side agreement for a legislative blueprint. Yes, the effort to reach consensus was derailed by . . . consensus.
After a long August silence, it appeared that the FCC would defer to Congress after all. Agency officials began working with House Energy and Commerce Committee Chairman Henry Waxman on a draft bill codifying network management rules. No Republican members endorsed the measure. Later, proponents abandoned the congressional effort to regulate the Net.
Still feeling quixotic pressure to fight an imaginary problem, the FCC leadership this fall pushed a small group of hand-picked industry players toward a “choice” between a bad option (broad regulation already struck down in April by the D.C. federal appeals court) or a worse option (phone monopoly-style regulation). Experiencing more coercion than consensus or compromise, a smaller industry group on Dec. 1 gave qualified support for the bad option. The FCC’s action will spark a billable-hours bonanza as lawyers litigate the meaning of “reasonable” network management for years to come. How’s that for regulatory certainty?
To date, the FCC hasn’t ruled out increasing its power further by using the phone monopoly laws, directly or indirectly regulating rates someday, or expanding its reach deeper into mobile broadband services. The most expansive regulatory regimes frequently started out modest and innocuous before incrementally growing into heavy-handed behemoths.
On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation. The darkest day of the year may end up marking the beginning of a long winter’s night for Internet freedom.
Commissioner McDowell’s account should be supplemented by John Fund’s Wall Street Journal column “The net neutrality coup” on the proponents of the FCC regulation. Long story short: this is a case for Stanley Kurtz.
Glenn Reynolds has faithfully tracked commentary on the FCC with the refrain: “HOW ABOUT WE JUST ABOLISH THE FCC INSTEAD?” Cleveland Plain Dealer deputy editorial page editor Kevin O’Brien reviewed the FCC’s Internet-related activity and had a modest proposal of his own that fell short of abolition: “We should start by encouraging Congress to slap the FCC senseless.” It seems to me that either approach is warranted under the circumstances.