FCC’s hand smacked over Internet power grab

Adam Thierer Contributor
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Internet freedom got a reprieve Tuesday when the U.S. Court of Appeals for the District of Columbia slapped down a brazen attempt by the Federal Communications Commission (FCC) to ignore the rule of law and begin imposing onerous regulations on broadband network operators. The decision, Comcast v. FCC, deals with arcane matters of regulatory agency jurisdiction, but the stakes were profound and the ramifications for the future of the Internet will reverberate for years to come.

In a nutshell, the FCC argued it had the right to impose so-called “Net neutrality” regulations on a private broadband operator based merely on a handful of principles that the agency had previously said it would not be enforcing as law. Net neutrality regulations would put FCC bureaucrats in the Internet’s driver’s seat and let them determine what was “just and reasonable” of private networks. Critics have rightly feared that Net neutrality sounded all too much a Fairness Doctrine for the Internet since similar language had been used in the broadcast era to justify all sorts of FCC meddling and micromanagement.

Regardless, the FCC’s original position—that its Net neutrality principles were only principles and nothing more—made sense since even a high school civics student can tell you that only Congress can make laws. Moreover, for a brief time, even the FCC seem to realize that laws that would comprehensively regulate such an important sector of the American economy, as Net neutrality rules would, almost certainly require our elected leaders in Congress to reopen and tweak existing statutes like the Telecommunications Act of 1996. After all, Congress had never authorized wide-reaching regulation of the Net or broadband networks, and so, if the agency wanted to extend its regulatory tentacles and wrap them around the Internet it only seems reasonable they get the blessing of lawmakers before doing so. And, for a time, the FCC stuck to a “Hands Off the Net” approach.

Regrettably, the FCC decided to ignore that earlier logic, throw statutory authority to the wind, and instead concoct creative interpretations regulatory authority via something know as “ancillary jurisdiction.” To simplify things greatly, the agency has some leeway under existing laws to use various clauses of previous congressional enactments to regulate the sectors and technologies it oversees. In this case, the FCC claimed that it had “ancillary jurisdiction” to enforce amorphous Net neutrality policy principles against Comcast under past case law or, more amazingly, via some of the deregulatory-minded passages from the Telecom Act of 1996. It was an astonishing display of bureaucratic hubris that flaunted the rule of law and asked the courts to essentially look the other way while the agency magically invented its own authority to act and expand its powers.

But the U.S. Court of Appeals for the District of Columbia (the D.C. Circuit) was not about to turn a blind eye. In fact, this particular appeals court has been a near constant pain in the keister for the FCC since the agency’s regulatory shenanigans are frequently brought before the court and just as frequently struck down as over-zealous, unconstitutional exercises of power.

In yesterday’s Comcast decision, the D.C. Circuit calmly but meticulously decimated each and every twisted rational that the FCC set forth in defense of its Internet power grab. Paraphrasing an earlier Supreme Court decision, the court noted that the FCC’s decision, not only “strain[ed] the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts,” but sought to “shatter them entirely.” More profoundly, the court noted that “Were we to accept [the agency’s] theory of ancillary authority, we see no reason why the Commission would have to stop there, for we can think of few examples of regulations that apply to [] common carrier services, [] broadcast services, or [] cable services that the Commission… would be unable to impose upon Internet service providers.”

In other words: Stop right there FCC! This is exactly what courts should be doing when rogue regulatory agencies run well afoul of their statutorily-defined limits, but all too often agencies get a free pass instead in the name of “agency deference.” Luckily that didn’t happen this time around thanks to the D.C. Circuit.

The question now is whether the FCC learns its lesson — that it should seek the proper authority from Congress before it imposes new regulations like Net neutrality rules — or if the agency instead engages in another effort to concoct regulatory authority via regulatory re-classification. If the agency takes that latter approach and tries to pigeonhole the Internet and broadband services into the public utility regulatory models of the past, it will set the stage for Regulatory World War III. Lawsuits will fly. Some carriers have already promised as much.

When will the agency accept the fact that it is not above the law and that there is a right way in a democracy to go about changing policies that have such a profound impact on our economy? Regardless of what one thinks of the recent health care bill, imagine if the Department of Health and Human Services would have tried to ram it through as a regulatory scheme instead of having Congress debate it and vote on it. People would have been outraged. And yet that’s exactly what the FCC is proposing to do when it comes to Net neutrality regulation and regulatory reclassification of the Internet as sleepy public utility. You know, because public utility regulation has worked soooo well in other contexts!

The D.C. Circuit’s decision yesterday should encourage the Commission to pause and reconsider its current approach. Unfortunately, it’s more likely that the agency will instead retrench and fight on in a futile attempt to take the law into its own hands and ignore the will of Congress. For the sake of Internet freedom, we have to hope the courts will continue to hold the line against such shameless regulatory overreach. And if Congress does use this as an opportunity to reopen the Telecom Act, they should tightly limit the powers of the FCC and make a strong stand in defense of Internet freedom.

Adam Thierer is President of The Progress & Freedom Foundation in Washington, D.C.