D.C. Circuit Voids FCC 'Net Neutrality' Order

, The National Law Journal

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Verizon HQ

The Federal Communications Commission once again came up short in its attempt to regulate broadband Internet service providers, with a divided panel of federal appellate judges striking down the agency’s net neutrality rules for the second time.

The U.S. Court of Appeals for the D.C. Circuit on Tuesday gave the FCC one important victory, establishing for the first time that the agency has the authority to issue rules governing broadband providers. But the agency’s Open Internet Order was improper, the court found, because it treats broadband providers as common carriers, like telephone companies.

“Even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates,” wrote Judge David Tatel, who was joined by Judge Judith Rogers in vacating and remanding the rule. Senior Judge Laurence Silberman dissented in part, concluding the commission did not have authority to issue the order from the start.

FCC Chairman Tom Wheeler in a statement said the court “correctly held” that the FCC has the authority to act. “We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform,” Wheeler said.

Verizon general counsel Randal Milch said in a written statement that the company looks “forward to working with the FCC and Congress to keep the Internet a hub of innovation without the need for unnecessary new regulations.”

The FCC’s net neutrality rules, issued in 2010, were supposed to be a “third way” according to then-chairman Julius Genachowski, to give the government a “limited but essential role” in making sure broadband providers didn’t block legal content or unreasonably discriminate against traffic on their networks.

Represented by Gibson Dunn & Crutcher partner Helgi Walker, Verizon sued the FCC in 2011, arguing the agency lacked authority to issue the rules, that they were arbitrary and capricious, and that the rules ran afoul of the FCC’s own, still-binding decision to classify broadband providers as more lightly regulated information services, not common carriers.

The agency in 2010 failed in its first bid to regulate broadband, when Tatel—writing for the D.C. Circuit in Comcast Corp. v. FCC—ruled that the agency lacked the authority to oversee Internet service providers based on its theory of ancillary jurisdiction.

The FCC tried again, this time asserting the agency has the authority to issue rules under Section 706(a) and 706(b) of the Telecommunications Act of 1996. The provisions direct the agency to “encourage the development … of advanced telecommunications” services and empower it to take steps to accelerate broadband deployment.

“We think it quite reasonable to believe that Congress contemplated that the Commission would regulate this industry,” Tatel wrote. “To be sure, Congress does not, as Verizon reminds us, ‘hide elephants in mouseholes.’ FCC regulation of broadband providers, the judge wrote, "is no elephant, and section 706(a) is no mousehole.”

What's being said

  • not available

    If consumer A uses twice as much electricity, heating oil, water or natural gas than consumer B, consumer A should inarguably pay more than consumer B. So why should it be any different when it comes to bandwith?

  • not available

    All important infrastructure should be nationalized, and the big corporate oligarchs broken up into tiny bits using the antitrust laws.

  • not available

    Another appropriate loss for the command-and-control statists.

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