FCC Falls Flat Defending Its Restoring Internet Freedom Order at D.C. Circuit

February 7, 2019 | by Andrew Regitsky

FCC Falls Flat Defending Its Restoring Internet Freedom Order at D.C. Circuit

The FCC knew it faced an uphill battle when it walked through the doors of the D.C. Circuit Court of Appeals for oral argument on its Restoring Internet Freedom Order on February 1, 2019.  That is the order that effectively ended net neutrality. 

For one thing, two of the three judges hearing the case were appointed by President Obama, while the third was a Reagan appointee.  Second, it was widely believed that the government shutdown hindered the FCC’s attorney’s preparations.  That is why the Commission unsuccessfully requested oral argument to be delayed.  Third, the FCC knew it was going to be difficult to defend an Order that was written so broadly (for example, preempting all state Internet activities), ignored evidence that contradicted conclusions, such as utility regulation of the Internet service was not hurting broadband investment; and offered ineffectual after-the-fact remedies for ISPs that violated its rules.  Unfortunately for the FCC, all its concerns were well-founded.

While you may read articles suggesting that both sides faced tough questions during oral argument, don’t be fooled.  Parties appealing the Order such as states, cities, consumer advocates and tech companies did a much better job than the FCC.  That is why the Court will almost surely vacate and possibly remand the Order.  
If it vacates without giving the FCC another chance to make its arguments with “better” legal justifications, then the 2015 Net Neutrality Order with its “bright line” rules and its Title II regulation of the Internet would be back in effect.  The Court could also leave the current rules in place while giving the Commission the opportunity for a rewrite.  No matter what the Court decides, the Commission or its allies would have the opportunity to appeal the Opinion to the full D.C. Circuit or more likely the Supreme Court.  
The best solution is for Congress to address the issue of Internet regulation once and for all, and while there is evidence that the House of Representatives will review net neutrality, a compromise is not in sight.

How will the D.C. Circuit decide that the Restoring Internet Freedom Order should be vacated and possibly remanded?  Let us count the ways:

  • Classification of broadband Internet Access service – The FCC lawyers did their best job defending the classification of broadband as an information service.  That is because there is a history of such a classification, including a Supreme Court decision in the so-called “Brand X” case.  Nevertheless, the two liberal judges, especially Patricia Millett, appeared to have difficulty in distinguishing plain old telephone service from broadband, suggesting broadband rides a telecommunications network and was not providing anything new other than a transmission network it rides.  

    Typically, for such a complex issue as broadband classification, the Court would give deference to an expert agency such as the FCC under the Chevron doctrine even if it disagreed with the agency’s decision.  However, with classification so crucial to the entire Restoring Internet Freedom Order, I believe that the Court will find the current information service classification is incorrect.
  • Public Safety - The FCC completely botched this issue.  The city of Santa Clara explained that the lack of bright line rules damaged firefighters last year when Verizon throttled their unlimited data plans as they battled wildfires.  Santa Clara noted how inadequate after-the-fact remedies would be by the Federal Trade Commission if an ISPs actions resulted in a loss of life or property.  Moreover, the attorney for Santa Clara pointed out that the FCC completely ignored this issue in the Order.  The attorney for the Commission had no good answer, forced to claim that the burden was on public service agencies to show they were harmed by ISPs.  That response won’t cut it.
  • Overly Broad State Preemption – The issue of public safety bled into state rights.  The Order preempted all state efforts to restore net neutrality.  However, one judge noted that such a broad preemption would even stop states from declaring that ISPs are forbidden from throttling firefighters since this would violate the preemption rules.  Once again, the FCC did not have a good answer.
  • Selective Use of Evidence – The judges attacked the fact that the FCC’s Order conveniently ignored evidence that contradicted its conclusions.  For example, the Commission claimed that classifying broadband Internet access service as a telecommunications service with complex Title II regulations would damage investments in the Internet.  Unfortunately for the FCC, however, in the Annual Reports (which are supposed to provide truthful information) ISPs said just the opposite.  The FCC had no good answer to this either, other than they were told by small ISPs that they would cut back on investments.

All in all it was a disastrous day for the FCC, and they knew it was coming. That is why since the Order was released, Chairman Pai and his ISP allies have urged Congress to become involved.  

Unfortunately, the net neutrality issue will linger.  The D.C. Circuit will render its decision in a few months.  Then the Supreme Court will likely hear the case.  That is why both sides in this issue know not to get overjoyed or dismayed by the decision here.  The net neutrality war continues unabated.