Court Says FCC Can't Stop States From Protecting Net Neutrality

from the ill-communication dept

Today a federal appeals court delivered a decidedly mixed decision in the FCC's ongoing quest to kill net neutrality and telecom sector oversight. On the one hand, the new 2-1 ruling by the US Court of Appeals for the District of Columbia Circuit backs much of the FCC's Orwellian-named "Restoring Internet Freedom" order, which not only repealed the FCC's 2015 net neutrality rules, but gutted much of the agency's authority over broadband providers. That decision shoveled any remaining telecom oversight to an FTC that experts say lacks the authority or resources to actually police giants like AT&T, Verizon, and Comcast (the whole point).

But the ruling wasn't without a few notable catches. The court was quick to kick several aspects of the agency's order back to the FCC for revision. The court noted the FCC failed completely to explore how the repeal would harm public safety and efforts like the FCC's Lifeline program, which doles out a modest $9 monthly subsidy to low-income users to be used on wireless, phone, or broadband service (they have to choose one). Pai's been trying to undermine this Reagan-era program for several years, so the fact his FCC didn't think about the impact gutting FCC authority would have isn't surprising.

The biggest part of the court's ruling is that it shot down the FCC's attempt to stop states from protecting net neutrality. In the wake of the FCC's repeal, 29 states have proposed their own state-level net neutrality rules, one of the biggest reasons ISPs haven't been pushing their luck. Some of these efforts, like California's SB822, actually go further than the FCC's 2015 rules did in policing things like zero rating (ISPs using usage caps as an anti-competitive weapon, something they're already doing).

But the court found that if the FCC is going to void its authority over ISPs, it can't then turn around and try to pre-empt states from protecting consumers themselves:

"We uphold the 2018 Order, with two exceptions. First, the Court concludes that the Commission has not shown legal authority to issue its Preemption Directive, which would have barred states from imposing any rule or requirement that the Commission “repealed or decided to refrain from imposing” in the Order or that is “more stringent” than the Order. 2018 Order ¶ 195. The Court accordingly vacates that portion of the Order. Second, we remand the Order to the agency on three discrete issues: (1) The Order failed to examine the implications of its decisions for public safety; (2) the Order does not sufficiently explain what reclassification will mean for regulation of pole attachments; and (3) the agency did not adequately address Petitioners’ concerns about the effects of broadband reclassification on the Lifeline Program.

ISPs have, and will continue to, whine incessantly about the perils of having to adhere to dozens of state-level net neutrality laws, but that's a problem of their own making. While large ISPs (and the Pai FCC) have tried to frame the FCC's 2015 rules as hugely draconian and restrictive, in reality they were fairly modest by international standards. And while the Trump DOJ (now not coincidentally run by former Verizon General Counsel Bill Barr) sued California for trying to protect consumers, this new ruling will likely complicate those efforts.

The court ruling supporting the majority of the FCC's repeal remains a bit surprising. Under the Administrative Procedure Act, a regulator has to base major policy decisions on solid justifications and hard data. But the FCC not only failed utterly to show that industry changes warranted such a reversal, its primary justification for repeal (that net neutrality rules stifled industry investment) has been repeatedly proven false. In reality the FCC effectively neutered itself at the behest of largely predatory telecom monopolies, at times using outright fraud to accomplish the goal. And so far, our courts are cool with it, apparently feeling constrained by previous Brand X court declarations (something made clear by Judge Patricia Millett):

"I join the Court's opinion in full, but not without substantial reservation. The Supreme Court's decision in [the Supreme Court's Brand X decision] compels us to affirm as a reasonable option the agency's reclassification of broadband as an information service based on its provision of Domain Name System ("DNS") and caching. But I am deeply concerned that the result is unhinged from the realities of modern broadband service."

No shit. A good chunk of the ruling goes well out of its way to support the FCC's reasoning, especially as it relates to the FCC contention that the broadband sector is competitive (if you're new to US telecom, it's not):

So yeah. As usual, what the courts declare to be valid, and what's actually intellectually and ethically valid are entirely different things. While you'll see a lot of bickering over the legalese in this decision, don't forget what really happened here: telecom lobbyists convinced the FCC to effectively neuter itself, using bogus data, massaged economic analysis, and fraud to accomplish it against the will of the the bipartisan majority of the public. And again, the United States legal system, at least up to this point, is largely cool with that.

While the appeals court ruling could still make its way to the Supreme Court (a major reason ISPs backed Kavanaugh), there are still several other paths for net neutrality supporters here. One, the state laws should work to help rein in some of the industry's worst impulses. But the ruling could also foster support for the three page Save The Internet Act, which would fully restore the 2015 FCC rules as an act of Congress. That bill passed the House last year but was blocked by McConnell in the Senate, one of a million considerations up for voter contemplation during the looming elections.

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Filed Under: ajit pai, dc circuit, deference, fcc, ftc, lifeline, net neutrality, pre-emption, public safety, states