At last, the contest everyone has been waiting for is finally here! Get ready tomorrow (Friday February 1) for the oral argument in Mozilla v. FCC, the challenge to the 2017 repeal of net neutrality and re-reclassification of broadband as a Title I “information service.” (aka the “Restoring Internet Freedom Order” or “RIFO”). Obviously, as one of the counsel’s in the case, I am utterly confident that we will totally prevail, so I am not going to try to rehash why I think we win. Besides, you can get horse race coverage and results anywhere. ToTSF is where you go for the geeky and get your policy wonk on!
So in preparation for the Superb Owl of the the 2018 telecom season, I thought I would point out some of the more fun arguments that may come up. As always, keep in mind that oral argument is a perilous guide to the final order, and the judges on the panel have a reputation for peppering both sides with tough questions. Also, there is a lot of legal ground to cover, and many important issues raised in the briefs may not get discussed at all because of time limitations. With all that in mind, here are some things to look for if you are lucky enough to be in the courtroom tomorrow, or listen to the full audio when it’s released.
Repeal of Section 257(c) Kills RIFO On A Technicality.
I particularly like this one for a number of reasons. I was the first one to think of it. It’s really wonky and technical. And if it works, it means Marsha Blackburn accidentally saved net neutrality — which would be the turnover of the decade.
Whats the Argument?
If you read the RIFO, you will find that the FCC systemically eliminated every possible source of FCC authority over broadband and preempted the states from creating their own net neutrality rules (more on that later). To provide a fig leaf for the claim that this didn’t leave people utterly helpless in the face of the broadband oligopoly, the FCC announced with much fanfare that it was including totally awesome “transparency requirements” to make ISPs put their policies in writing, so the FTC could hold them accountable for only screwing you in ways they told you about. (Actually, the RIFO reduced the transparency requirements that existed under the 2015 Open Internet Order, and eliminated the complaint process. In fact, it’s pretty clear that the FCC doesn’t even intend to enforce its own disclosure rules. But we’ll skip that for the moment.)
But wait, you ask. If the FCC eliminated all possible sources of authority to regulate broadband, how did it impose a transparency requirement — even one as useless and pathetic as this one? Good question! The FCC claimed to be operating under “ancillary authority,” a doctrine that gives the FCC authority to do things that are “reasonably ancillary” to doing its job. But one of the tricks of ancillary authority is that it has to be ancillary to some specific statutory duty or provision (this was what tripped up the FCC when it tried to enforce the Internet Policy Statement against Comcast after they blocked peer-to-peer applications in ’08). What was this wussy “transparency” rule ancillary to? The RIFO pointed to Section 257(c), which required the FCC to collect a report every three years identifying market barriers to entry for telecommunications and information service providers, and to eliminate them via regulation (the barriers to entry, not the potential new entrants who might challenge the incumbents. Apparently, Pai got a bit confused on that.) The RIFO claimed that the “transparency” requirement is ancillary to doing this report.
This argument was already pretty shaky, as the D.C. Circuit has been steadily eroding ancillary authority and it’s hard to see how a transparency requirement really helps the FCC do its Triennial Report. But there was some language in the Comcast Case (where the D.C. Circuit swatted down the FCC’s ancillary authority argument for net neutrality) that made this argument at least plausible.
But after the FCC adopted the RIFO, Congress eliminated Section 257(c) as part of the RAY BAUM’S Act. This eliminated the FCC’s already tenuous statutory authority for a transparency requirement. It is axiomatic that when Congress eliminates the agency’s source of statutory authority for a rule, then the rule is no longer valid. So the RAY BAUM’S Act accidentally eliminated the transparency requirement.
But doesn’t that make things worse? This is where we get to the principle of severability. Generally, if one provision of a law or rule goes down, the other provisions survive (that is, they are severable from the provision that went down). But sometimes a provision of a statute or rule is so central that Congress or the agency would not have done the rule at all without this piece. In that case, the provision is not severable, and the entire rule is scrapped. You remember back in December when a TX judge declared the entire ACA unconstitutional? That was an example of non-severability at work.
OK, but how do we know the transparency report is not severable? Well, happily, the FCC itself told us so. Remember when I pointed out last year that the net neutrality repeal hadn’t gone into effect when it should have based on publication in the Federal Register? According to the FCC, (well, Chairman Pai at any rate) that was NOT because — as I speculated — the Order was not really expected to go into effect but was a negotiating tactic to get Democrats to accept a bad legislative deal. It was just that the FCC was delaying implementation until OMB approved the transparency requirement because that requirement was so important that the FCC would not allow the Order to go into effect until they knew the now-reduced transparency rule was approved and in effect. This, of course, is the actual definition of “not severable.” So if the court decides that the RAY BAUM’S Act accidentally repealed the transparency rule, it’s pretty hard for the FCC to claim that this provision was severable, and if it’s not severable, then the whole RIFO goes down.
The cherry on the top of winning this argument is that the major champion of pushing through the RAY BAUM’S Act was then-Representative Marsha Blackburn. So if the court accepts this argument, it will be now Senator Marsha Blackburn who accidentally saved net neutrality and Title II.
What’s the FCC’s counter argument?
The FCC’s counter argument is that while RAY BAUM’S Act did repeal Section 257(c), it created a new report on the broadband marketplace generally, and included in this new reporting requirement a somewhat changed version of 257(c). So even if the actual statute was eliminated, the FCC could easily just rely on the new annual report on the broadband marketplace as a source of authority.
Why This Doesn’t Work.
In Administrative Law, you don’t get to introduce a new argument to support your agency order after the fact. The court can only rule on what the agency actually did on the record. True, this happened after after the Order was issued. Tough beans. The FCC could have suspended RIFO after RAY BAUM’S passed, issued a new public notice to find an alternate source of authority, and then reissued the RIFO. But it didn’t. So it’s stuck with a rationale that no longer exists under the statute.
Why I Am Hopeful This Flies.
The virtue of this argument is that it sidesteps all the complications around Chevron (aka agency deference) and doesn’t make a decision on the policy. It reverses and puts the agency back at square one, and on grounds that are not particularly attractive for the Supreme Court to review in the event of an appeal. It may even appeal to Judge Williams (at least philosophically), because finding that the agency can simply declare after the fact that the new statute is “close enough” would be an enormous expansion of agency authority and agency deference.
Sure, it throws things back to the agency in a way that’s easy to correct. But so what? We now have a Democratic House and a very different political environment than we did in 2017. Meanwhile, once the Order is reversed, we go back to Title II, the 2015 net neutrality rules, and no preemption against the states, which means the California net neutrality rule goes into effect. Which brings me to the next legal argument to watch.
THE FCC WINS ON RECLASSIFICATION AND LOSES ON PREEMPTION.
Repeal of net neutrality sparked a major political backlash, and several states passed their own net neutrality laws, or have governors who issued executive orders on the subject. These laws come in two flavors. Some, like the California law, re-regulate net neutrality at the state level. Others, like Vermont (which is also facing a lawsuit) require that any ISP that wants a state contract must agree to abide by net neutrality rules within the state.
The Trump Administration and the ISP industry have challenged these laws on the grounds that the FCC preempted them. As I explained last year, there are lots of good reasons to think this preemption doesn’t work — particularly with regard to the state acting as a purchaser of broadband. The Trump Administration and ISPs counter that because broadband is an interstate information service (a) the FCC has preemption power somehow, even though it has no actual delegated statutory authority; and, (b) even the FCC can’t do it, the Commerce Clause prevents the states from regulating anything interstate commerce related.
I’m not going to rehash why I think these arguments are wrong (you can go back and reread my 2018 blog post for that). We have a whole separate brief by state and local governments on this issue, and the D.C. Circuit scheduled a block of oral argument time specifically to address the state and local government issues, of which this is the biggest. That last doesn’t actually tell us anything, since D.C. Circuit rules give state and local governments the right to file their own brief (which is why the captioning on this case is occasionally confusing). Still, given that we are going to spend a chunk of time at oral argument on this, it’s kind of a surprise that no one has really talked about what would be the ISP’s worst possible result — no federal rule, an FCC powerless to preempt the states, and 50 different state rules.
Why I am hopeful this flies.
Granting the FCC preemption power in this case would be an enormous expansion of agency authority in a court that has traditionally been highly skeptical of agency authority. While results driven deregulators are happy to imagine federal power as a one-way ratchet that can be used for state preemption but not for federal regulation, there isn’t a lot of legal theory to support this type of agency authority. That leaves the generic Commerce Clause argument, which the FCC didn’t actually rely on RIFO and which has a whole bunch of problems. This is especially true for when the state acts a purchaser, given that state sovereignty got a boost last year in the Supreme Court’s sports betting decision.
The one constant in the net neutrality arguments over the years is that nothing in oral argument ever goes as expected. In something this big and complicated, it’s extremely likely that the judges will find something that no one else focused on that grabs their attention and comes up in oral argument. As always, keep in mind that oral argument is not a super good indicator of how the final decision will read — especially for something big and complicated.
But remember, as we saw in 2014, how the court reaches its result is sometimes more important than the actual result itself. Keep that in mind in the flood of coverage that will revolve around who won and who lost.
Stay tuned . . .