Judges Issue Narrow Decision in Overturning Net Neutrality Rules

The 6th U.S. Circuit Court of Appeals ruling overturning the FCC’s latest net neutrality order Thursday was based on the court’s reading of the Communications Act and failed to dive into major questions items, as laid out in recent U.S. Supreme Court decisions (see 2409030030). It also means the next FCC, under President-elect Donald Trump, likely won’t spend its early days on a reversal of the order, which was approved 3-2 in April (see 2404250004).

Net neutrality advocates said the ruling was a setback for consumers, while ISPs, which brought the case, hailed it. While the incoming administration is unlikely to appeal, public interest groups and other intervenors in the case might try bringing it before SCOTUS, academics and FCC-watchers said.

Republican FCC Commissioner Brendan Carr, picked to lead the agency starting Jan. 20, called the decision a win for consumers. “Over the past four years, the Biden Administration has worked to expand the government’s control over every feature of the Internet ecosystem,” Carr said. The “entire plan rested on the Chicken Little tactic of persuading Americans that the Internet would break in the absence of these so-called ‘net neutrality’ regulations. The American people have now seen through that ruse.” Carr added, “The work to unwind the Biden Administration’s regulatory overreach will continue.”

FCC Chairwoman Jessica Rosenworcel said it's now time for congressional action. “Consumers across the country have told us again and again that they want an internet that is fast, open, and fair,” she said: “With this decision, it is clear that Congress now needs to heed their call, take up the charge for net neutrality, and put open internet principles in federal law.” Commissioner Anna Gomez echoed that statement, saying “appropriate guardrails are necessary to ensure" that internet service “remains accessible and secure for all.”

“We acknowledge that the workings of the Internet are complicated and dynamic, and that the FCC has significant expertise in overseeing ‘this technical and complex area,’” Judge Richard Griffin wrote in the unanimous decision of the three-judge panel (see 2501020028). “Yet, post-Loper Bright, that ‘capability,’ if you will, cannot be used to overwrite the plain meaning of the statute,” he said. Loper Bright v. Raimondo, handed down in July, ended the decades-old Chevron doctrine and likely means expert agencies will receive less deference in the decisions they make (see 2406280043).

Judges didn’t delve into the major questions test, as laid out in a 2022 SCOTUS decision, West Virginia v. EPA (see 2206300066). “Given our conclusion that the FCC’s reading is inconsistent with the plain language of the Communications Act, we see no need to address whether the major questions doctrine also bars the FCC’s action here,” Griffin wrote.

In addition, he said the court wasn’t addressing petitioners’ additional arguments, “including that their provision of Domain Name Services and caching -- which they contend are integrated products to the offering of Internet access services -- further (or independently) demonstrate that they qualify as offering an information service to end users” and that the order is “arbitrary and capricious.”

But the court looked separately at the order's application to mobile wireless services, noting those services are covered by a different section of the Communications Act, added in 1993. “In sum, mobile broadband does not qualify as ‘commercial mobile service'” under Section 332(d)(1) “and therefore may not be regulated as a common carrier,” the decision said. Mobile broadband “simply does not constitute a service interconnected with ‘the public switched network.’”

The FCC sought transfer of the appeal to the D.C. Circuit, which had handled previous net neutrality cases. The Cincinnati-based court rejected that request in June (see 2406280060).

“We strongly disagree with the court’s reasoning and its misapplication of Supreme Court precedent,” said Public Knowledge, in a release condemning the 6th Circuit’s finding that broadband can be categorized only as an information service. “If this was true, it’s what the Supreme Court would have said in 2005,” the group said, referring to the 2005 SCOTUS case NCTA v. Brand X, which concerned the FCC’s eligibility for Chevron deference.

ISPs Pleased

The 6th Circuit ruling “is not only the proper reading of the statute, but a victory for American consumers that will lead to more investment, innovation, and competition in the dynamic digital marketplace,” said a joint statement from USTelecom, CTIA and several state ISP groups. “Since the birth of the internet, bipartisan Administrations and policymakers have recognized the virtues of a light-touch approach to broadband regulation."

MoffettNathanson’s Craig Moffett said the decision was a win for investors, though it was clear for some time that the courts were unlikely to uphold the order. “The fear was that Title II reclassification, deemed by the Courts to be a necessary pre-requisite for the FCC’s authority to impose Net Neutrality, separately opened the door -- albeit through an admittedly circuitous route -- to broadband price regulation,” Moffett said: “That risk is now put to bed.”

Brookings Institution senior fellow Blair Levin and congressional observers are highly doubtful that lawmakers will have the will or appetite to enact compromise net neutrality legislation during the new Congress, with Republicans in the majority in both chambers. Observers noted that when Republicans last held both the House and Senate, during the initial two years of Trump’s first term, party-affiliated lawmakers failed to make headway on compromise and Democrats concentrated on a Congressional Review Act resolution to undo the FCC’s rescission of its 2015 net neutrality rules.

“I would take the under and give odds” against Congress moving a net neutrality compromise any time soon, Levin told us. He in part cited the likelihood of “general dysfunction” within GOP ranks and the Republicans’ razor-thin majority in the House. Levin also pointed to “the difficulty of crafting” such a deal because the matter has become so polarizing over time. “If you had members of Congress try to draft something, they would end up saying, ‘Can’t we just go on to something else?’” he said: The 6th Circuit decision’s more immediate legislative impact is likely to be “the possibility of fragmented state-by-state regulation of broadband.”

SPs “can now strengthen their focus on offering people faster speeds, more affordable prices, and quality service without the threat of utility-style Federal regulations hampering their investments,” said ACA Connects President Grant Spellmeyer.

Net neutrality’s “latest (and final) demise is completely justified and hopefully will be followed by courts striking FCC rules on data security and digital discrimination,” former FCC Commissioner Mike O’Rielly said.

An appeal to SCOTUS is less likely to be granted certiorari if it lacks the backing of the FCC or the U.S. solicitor general, noted Daniel Lyons, professor at Boston College Law School.

Carr and other net neutrality opponents could see an appeal to SCOTUS as positive, said University of Minnesota media law professor Christopher Terry. While a future FCC could take another stab at net neutrality rules after the 6th Circuit decision, a definitive ruling from SCOTUS -- currently sporting a majority of justices seen as having an unfavorable view of net neutrality -- could put the matter to bed permanently, he said. A SCOTUS opinion would also provide clarity on what Loper Bright means for the agency, Terry said. The FCC is currently “in a state of ambiguity” about its authority.

If other courts see Loper Bright as the 6th Circuit did, it's likely to lead to the FCC’s digital discrimination and other rules being struck down, but it could also be “bad news for the Trump administration,” Lyons said. “It means judges are going to look more carefully about whether the agency has statutory authority,” he said: “To the extent that the Trump FCC is going to try to freelance at the edge of its authority the way that the Biden FCC did, I think it would suffer as a result.”

In a post on X, former FCC Chairman Ajit Pai wrote, “It’s time for regulators and activists to give up on this tired non-issue once and for all and focus on what actually matters to American consumers -- like improving Internet access and promoting online innovation.”

States

The 6th Circuit opinion likely moves the battleground over net neutrality to the states, said academics and attorneys. The ruling firmly classifies broadband as an information service, and the FCC doesn’t have broad authority to preempt state laws regulating information services, said Best Best & Krieger attorney Cheryl Leanza. “We have a much more open lane for them to act.”

PK said the ruling leaves "in place the ability of states to enact and enforce their own net neutrality and broadband consumer protection laws, as many have done over the past several years.” For Lyons, the 6th Circuit opinion “reopens the door for states like California or Vermont to try to reimpose net neutrality on a state level.”

The decision is “tremendous news for ISPs and the consumers they serve,” a Wireless ISP Association spokesperson emailed: “It was the very absence of utility-style regulation that allowed the internet to flourish, and it has proven key in enabling small ISPs to serve hard-to-reach rural, under-resourced and Tribal parts of the country.”