FCC's Pending Net Neutrality Order Is Seen Facing Similar Legal Fight as 2015's

An important change from 2015 is the U.S. Supreme Court’s evolving stance on agency deference. In January, the high court heard hours of argument in cases challenging Chevron deference to agency expertise: Loper Bright Enterprises v. Raimondo and Relentless v. Commerce (see 2401170074).

An appeal of the FCC order is likely and probably would land before the U.S. Court of Appeals for the D.C. Circuit, legal experts and net neutrality watchers say. Such an appeal also would feature many of the same appellants and FCC supporters, they tell us. It's the appropriate court for an appeal of agency rulemaking, and it dealt with the 2015 order and its subsequent repeal, telecom and tech lawyer Marc Martin of Perkins Coie said. Most of the same parties that fought in 2015 "are going to want to fight it again."

Any appeal will largely resemble the appeal of 2015's order, said Cato Institute research fellow Brent Skorup. Major questions, Chevron deference and the First Amendment will likely be the primary legal issues, he said. The First Amendment played a large role in litigation the last time, and the FCC in the order detailed why it thinks the rules satisfy First Amendment scrutiny, he noted. Several parties might dispute in an appeal some of the FCC grounds in the order, said Stephanie Joyce, Computer & Communications Industry Association chief of staff.

In the draft order, the agency tries to preempt First Amendment arguments against it. The draft says the proposed general conduct standard doesn’t burden any of the 1A rights of broadband internet access service (BIAS) providers, which “are conduits, not speakers.” “When broadband providers deliver content that has been requested by their customers, they are no different from telephone companies or package delivery services like FedEx, which have never been thought to be engaging in their own expressive activity when merely carrying the messages of others,” it said.

Many court watchers expect the conservative supermajority to rewrite the rules on agency deference in the same way they have overturned established precedents in recent years. Recent Supreme Court decisions have embraced its own “major questions doctrine,” holding that when an administrative agency decides an issue of major economic or political significance, a broad delegation from Congress is no longer enough (see 2302080064).

Starting with a briefing for reporters the day before the draft order was released (see 2404030043), the FCC argued the proposed rules would survive legal challenge. Net neutrality rules are “wildly popular,” Chairwoman Jessica Rosenworcel said in California last week, adding the draft rules are “court approved.” Rosenworcel said, “I want to make sure that they are again the law of the land.”

Major Questions

The major questions doctrine makes the proposed order "legally vulnerable," Free State Foundation President Randolph May told Commissioner Brendan Carr, according to a filing Friday in docket 23-320. May said it was "extraordinary ... for an agency to propose burdensome restrictive major regulatory mandates without any meaningful evidence of any present harm to consumers or competition."

Daniel Deacon, assistant professor at the University of Michigan Law School, pointed to Justice Brett Kavanaugh’s dissent as a D.C. circuit judge in the 2017 en banc affirmation of the 2015 net neutrality rules (see 1808280054). Kavanaugh argued that imposing net neutrality rules via Title II represents a "major" policy that requires clear congressional authorization under the major questions doctrine, and that such authorization was lacking, Deacon said: SCOTUS “could reach that conclusion regardless of what they end up doing in Loper Bright and Relentless.”

The commission tries to head off major questions arguments in the draft order. "We do not think the major-questions doctrine properly comes into play in this context at all," it said. "We are simply following the best reading of the Communications Act, as demonstrated by the statute's plain text, structure, and historical context: there is no call for deference to an interpretation that is not the statute's most natural reading." The rules won't "have the extraordinary economic and political effect required to implicate the major-questions doctrine,” according to the draft order. While the rules “will have substantial benefits for the American public … not every regulatory action that has substantial effects is so momentous as to trigger the major-questions doctrine,” it said. “The Internet will continue to sustain its enormous economic and social value under our actions today, just as it did under the 2015 Order.”

The pending net neutrality order “is the antithesis of the Supreme Court’s major-questions cases,” the FCC said. “There is nothing novel about the Commission’s exercise of its classification power here,” as the agency has exercised it numerous times, it said. “Regulating communications services and determining the proper regulatory classification of broadband falls squarely within the Federal Communications Commission’s wheelhouse,” the commission said.

Cato's Skorup disagreed. The agency sees national security implications in net neutrality and finds that it's important for free speech, "telegraphing they believe" it's a major question, he said.

Chevron

It's unclear how the Supreme Court seemingly heading toward some change to its Chevron doctrine would play out in the inevitable appeal of the FCC's order. The net neutrality issue isn't about the FCC having superior insight into the nature of broadband but is a political question about oversight, said Douglas Holtz-Eakin, American Action Forum president. By the time a net neutrality case comes before the D.C. Circuit, there would likely be a SCOTUS ruling affecting Chevron, and the appellate court would have to be guided by it, he said.

CCIA's Joyce said that even if SCOTUS rejects Chevron, that doesn't apply to net neutrality, since it doesn't involve a brand new and novel FCC action. "How can you possibly say that about whether broadband is a Title II service?" she asked. "This stuff is old."

Some see a net neutrality legal fight charting new territory. The draft order is broader than 2015's, with issues of national security and broadband contributing to USF, so there are several different issues than were involved in the past, said Holtz-Eakin.

While it seems likely that SCOTUS will curtail or reject the Chevron doctrine sometime this summer, that isn't going to deter the FCC, Skorup said. But it could change how the D.C. Circuit -- which upheld the 2015 net neutrality order -- approaches things, he said. Given SCOTUS reversals of the D.C. Circuit on federal agency deference issues, such as 2021's Alabama Association of Realtors decision, "I would hope the D.C. Circuit would get the message ... that it needs to apply more scrutiny than it is giving agencies currently," he said.

“The net neutrality rule will undoubtedly be characterized by the reviewing court as a major question because it is an issue of ‘vast economic and political significance,’” emailed Thomas McGarity, University of Texas' Lozano Long Professor in Administrative Law. “That being the case, Chevron will be inapplicable,” he said: “The court will only ask whether Congress has clearly authorized the agency to promulgate the rule. The clarity of the authorization will be the primary issue on appeal.”

Other lawyers said it’s not preordained that the order will be overturned.

“It's important to remember that the only reason why broadband is an ‘information service’ is because of Chevron deference,” said Public Knowledge Senior Vice President Harold Feld. The 9th U.S. Circuit Court of Appeals in 2003 ruled that cable modem service was a telecom service (see 0310070014), he said. SCOTUS’ 2005 Brand X decision (see 0506280100) then “reversed the 9th Circuit on the grounds of Chevron deference,” he said. In 2019, the 2017 order rolling back the 2015 net neutrality rules survived a challenge at the D.C. circuit only because of precedent (see 1912130020), Feld said. Two of the judges, Patricia Millett and Robert Wilkins, indicated they would have found the rollback order “arbitrary … but for Chevron and Brand X,” he said.

“One cannot help what activist judges will do,” but if the pending order is returned to the D.C. Circuit, “I would expect it to be affirmed,” Feld said.

The Supreme Court held in Brand X that the FCC has the discretion to decide how to classify broadband, emailed Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman. “If, as is likely, the Chevron, and Brand X precedents will be modified to some degree this spring, and depending on what the Court says, the matter might then have to be resolved by analysis of the text,” he said.

Perkins Coie's Martin said it's likely the D.C. Circuit could affirm the FCC's action again, as there's consistent precedent that agency action on the matter is OK. However, if SCOTUS overturns Chevron, the appellate court may feel compelled to come out differently, he said. And if the D.C. Circuit overturns the FCC, SCOTUS could very well deny any subsequent cert petition by the agency, he said.

Schwartzman questioned whether SCOTUS will ultimately hear the case. The court is “loath to overrule precedent unless absolutely necessary,” he said.