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Seeking a Supreme Court Review of Open Internet Rules

09.28.2017

Today, USTelecom is among several parties to formally request Supreme Court review of the Federal Communications Commission’s 2015 Open Internet Order, which reversed decades of established legal precedent and common sense by reclassifying broadband access as a public utility service. Our members believe the best path forward is for the court to overturn the FCC’s decision and send a clear signal to federal agencies that they cannot unreasonably expand their regulatory powers without congressional approval.

The question USTelecom presents today in a “Petition for a Writ of Certiorari,” which is a request for the high court to hear the case, is this: “Whether the Federal Communications Commission lacked the clear congressional authorization required to assert plenary authority over a large and growing segment of the economy by imposing public-utility, common-carrier obligations on broadband Internet access service.”

In the cert petition, USTelecom argues that the Supreme Court should “grant the petition and vacate the D.C. Circuit’s decision below to vindicate Congress’s scheme of sharply limited regulation for broadband and, more generally, to ensure that courts do not permit unelected agencies to expand their regulatory powers over important aspects of the national economy without clear congressional authorization.”

Given that the FCC is currently reexamining these rules through a new proceeding it launched in May which could moot this challenge, USTelecom states that “[i]f the FCC issues new regulations returning broadband Internet access service to its proper classification, petitioners will file a supplemental brief explaining why the Court should grant the petition and vacate the D.C. Circuit’s opinion on mootness principles.” If the agency does not reverse its position or fails to act in a reasonable amount of time, USTelecom urges the Court to grant the petition and set a date for arguments.

The heart of this petition is the question whether the FCC overstepped its authority in 2015 when it adopted the Open Internet Order, which reclassified broadband internet access service under Title II of the Communications Act.

As our filing states:

“…this petition focuses on one important and recurring issue of significance both in this case and to administrative law more generally: the D.C. Circuit’s decision to defer to an FCC ruling arrogating to itself vast regulatory power over a large and growing sector of the U.S. economy, without any indication, much less the clear indication required by this Court’s cases, that Congress intended to empower the Commission to make such a change.  The Court should grant review and hold that deference is inappropriate in such circumstances, so that, in the future, the federal courts ensure that Congress, and not a group of unaccountable bureaucrats, makes such fundamental policy determinations.”

The questions presented in this petition are not trivial since these regulations have the potential to burden significant parts of the U.S. economy to a still-unknown extent. Broadband is an essential service for millions of households and businesses and it plays a major role in enabling other large sectors of the economy. Broadband providers have invested about $1.5 trillion in fixed and mobile infrastructure since 1996 and the largest broadband providers are leaders in domestic capital expenditures among all American companies.

But instead of adopting light-touch regulation on this vital segment of the economy, the FCC asserted for the first time the authority to impose a common-carrier regime that was designed for a bygone era.

“… [A]lthough the FCC has purported to “forbear” from some aspects of Title II, the core of public utility regulation still remains.  Broadband providers remain subject to the fundamental public-utility requirements of providing services at what an agency or court determines after the fact to be reasonable rates and practices.  See 47 U.S.C. §§ 201, 202.  Plaintiffs’ lawyers can now bring complaints and class actions against providers seeking damages based on creative theories about how providers’ practices may violate § 201, § 202, or other provisions that the FCC has left in force…. By putting any new practice under scrutiny under this nebulous standard, the FCC has significantly discouraged innovation.  The Commission staff has already cast doubt on the pro-consumer practice of “zero rating” or “sponsored data,” in which a content provider, rather than the customer, pays for the data usage to access its content, thus providing free service to consumers in a manner akin to toll-free calling. Other innovative and pro-competitive practices are likely to come under scrutiny as well.”

USTelecom argues that Congress did not authorize the FCC to adopt regulations that can have such a far-reaching implication on the U.S. economy.

“The D.C. Circuit should have viewed with a healthy “measure of skepticism” the FCC’s discovery — 20 years after its enactment and after numerous failed attempts to reach the same result through legislative amendment – […] that the 1996 Act grants it authority to impose common-carrier regulation on this massive sector of the economy. ’… The court of appeals nevertheless deferred to the Commission on the theory that Congress had left ambiguous the appropriate classification of Internet access services.  That deference — based in part on an incorrect reading of Brand X,[…]— was inconsistent with this Court’s precedent. The court failed to identify the clear congressional authorization required for the FCC to enact a major regulatory scheme that, moreover, is ‘inconsisten[t] with the design and structure of the statute as a whole.’”