The D.C. Circuit Court of Appeals recently held that the FCC was not authorized to prohibit Comcast from interfering with P2P networking applications, erecting what appears to be a large roadblock on the FCC’s path to net neutrality. The court held that the FCC’s ancillary authority under Section 4(i) of the Communications Act of 1934 did not extend it sufficient power to regulate broadband services absent explicit statutory goals.
The FCC had largely tied its own hands in the case: its designation of broadband as an ‘information service’ under the Bush administration was granted Chevron deference by the Supreme Court in the 2005 Brand X case, leaving it unregulated in an effort to promote investment. The agency simply adopted four principles of net freedom that they expected broadband companies to abide by and went home for dinner. However, with competition in broadband access arguably dwindling rather than burgeoning, public interest groups like the Open Internet Coalition are seeking increased regulation to protect consumer choice, and the FCC wants to lead the way.
As it turns out, the Comcast ruling may not be the big obstacle it first appears to be. The Brand X majority openly accepted the FCC interpretation over the Ninth Circuit’s version, stating that only judicial precedent holding a statute unambiguous can displace agency construction. In a dissent, Justice Scalia argued that the Court was ceding far too much by allowing the FCC to define ambiguous statutory terms and then flip its definition to suit its fancy in future disputes, a fear the majority seemingly shrugged off. Here is a hypothetical presented by Justice Scalia in his Brand X dissent:
Imagine the following sequence of events: FCC action is challenged as ultra vires under the governing statute; the litigation reaches all the way to the Supreme Court of the United States. The Solicitor General sets forth the FCC’s official position (approved by the Commission) regarding interpretation of the statute. Applying Mead, however, the Court denies the agency position Chevron deference, finds that the best interpretation of the statute contradicts the agency’s position, and holds the challenged agency action unlawful. The agency promptly conducts a rulemaking, and adopts a rule that comports with its earlier position–in effect disagreeing with the Supreme Court concerning the best interpretation of the statute. According to today’s opinion, the agency is thereupon free to take the action that the Supreme Court found unlawful. 545 U.S. 967, 1016.
The FCC would appear, at least from Justice Scalia’s viewpoint, to have a semantic out. Michigan Law Professor Susan Crawford argues that the agency should simply relabel high-speed internet services as ‘telecommunications services’, which are subject to regulation under Title II of the Communications Act. Simple enough, no? Not according to one blogger, who analyzes the proposed methodology and concludes that it would open a Pandora’s Box. In fact, Crawford herself recognized difficulty with this strategy in a 2006 article for Berkeley Tech Law Journal:
Congress should act to cabin and explicate the scope of the Commission’s authority to regulate the internet. The difficult and important question of how to govern the internet should be answered explicitly rather than through formalistic re-characterization of internet services by an independent agency. 21 Berkeley Tech. L.J. 873, 931.
In contradicting her recent Op-Ed piece, she highlights an alternative route the FCC can take: ask Congress to redevelop FCC authority and provide more logical regulatory boundaries in light of the dramatic advances in communications technology over the past several decades. Congressional action would add legitimacy to the process and allow for the formation of a structural foundation that represents the importance of internet functionality in the modern age. In the meantime, the National Broadband Plan is moving forward and the FCC plans to launch more than 60 proceedings within the year, authorized or otherwise.