Opening Day at the Court of Appeals

Andrew Jay Schwartzman

After a long pre-season in which little else happened other than setting a schedule and format for briefing, August 20, 2018 was Opening Day for the litigation appealing the Federal Communications Commission’s December 2017 network neutrality decision. Two groups of challengers (technically referred to as “petitioners”) filed their briefs Monday evening in the U.S. Court of Appeals for the District of Columbia Circuit. (Benton Foundation, represented by this author, is one of the petitioners in the case.) Next week, on August 27, a group of tech industry companies which have intervened in support of the petitioners will file their brief, along with a dozen or so amici curie (friends of the court) briefs from scholars and public interest groups who will appear as friends of the court.

A non-frivolous case for reversal

The other side will present their defense soon thereafter. The FCC and the United States (which are denominated as “respondents”) will file an opposition brief on October 11. Internet service providers (ISPs) and their trade associations will file their own intervenors’ brief supporting the government the next week, as will their supporting amici.  After reply briefs are filed on November 16, the case will be set for oral argument, probably in the first month or two of 2019. A decision could be issued by mid-summer, perhaps earlier.

“Brief” is something of a misnomer here; together, the two Monday filings total about 130 pages. They present a dozen or so different bases which, the petitioners argue, justify reversal of the FCC’s decision. It is a matter of speculation which, if any, of these will appeal to the three-judge panel that will hear the case, but this overview attempts to highlight what may be a few of the most important points in the briefs.

The petitioners are divided into “governmental” and “non-governmental” groups for the filings. The 22 governmental parties are states, counties as welI as the California Public Utility Commission. [see brief] In addition to Benton, the 13 non-governmental petitioners are business and public interest organizations including, among others, Mozilla, Public Knowledge, and a trade association of small telecommunications providers called INCOMPAS. [see brief]   Although these parties are in agreement with each other, there are practical reasons for separate filings; governmental bodies generally cannot file jointly with private parties. In addition, the two-brief structure enables the governmental parties to emphasize matters of unique concern to them.

Broadly speaking, there are three somewhat overlapping categories of challenges: legal, procedural, and factual.

The legal arguments are centered on the FCC’s interpretation of the Communications Act. One of the unusual aspects of this case is that the FCC’s approach to regulation of broadband internet access service (“BIAS”) has changed several times, and in each instance has been subjected to judicial review. In 2005, the Supreme Court upheld an FCC decision that classified internet service delivered by cable modems as an “information service” which is thus lightly regulated under Title I of the Communications Act. Critical to the holding was that the operative statutory definition is ambiguous, a finding which means that reviewing courts give deference to a “reasonable” agency construction.  In 2015, a very different FCC construed the same statute differently to justify re-classifying BIAS as a “telecommunications service” subject to Title II of the Communications Act.  That finding enabled the FCC to apply net neutrality rules prohibiting ISPs from blocking, throttling (slowing down), or otherwise discriminating against particular websites and online services. In 2016, under precedents that permit agencies to reinterpret ambiguous statutes so long as they provide a reasonable justification, the D.C. Circuit upheld the FCC’s decision.

The decision now under review rescinded Title II status for BIAS, thereby taking away the statutory basis for the former net neutrality rules. Central to the 2005 FCC order upheld by the Supreme Court was a finding that BIAS customers were purchasing one package of which included the delivery of the data (a “telecommunications service”) as well as several inextricably intertwined add-on services, including email, domain lookup services, and data caching. The 2015 FCC decision had rejected this approach on the basis that broadband subscribers are principally buying the data delivery, and that other services provided are incidental to the data service. For example, while many or most customers used the ISPs’ email offering (e.g, as of 2005, that is no longer the case in an era of GMail and other web-based services. In restoring Title I status to BIAS, the FCC’s 2017 decision says that these services are still available, if not always used. In the new briefs, the petitioners argue that since many third parties offer these services, the FCC cannot justify deregulation just because a small portion of their business is involved in performing those functions. To cut through the complexity of technical and legal jargon, the brief uses a simple but compelling metaphor:

To appreciate how much of a stretch [the FCC’s reading] is, imagine a road laid by a city. The road leads to two seaside hotels, the Mozilla and the Etsy, which provide sleeping, business conferencing and beach recreation services. The city argues that the road is exempt from regulation by the roads agency because it is really a hotel. It provides the capability for guests to drive to the hotels and use those hotels’ facilities, and the city built it with that purpose. Never mind, continues the city, that the road does not provide the guests with any lodging, business conferencing or beach recreation services itself. That is the essence of what the FCC argues. But here, the transformation of road into destination is not allowed by the controlling statute

The briefs place a strong focus on the claim that the new decision is not a reversion to the analysis upheld by the Supreme Court, but goes much further to claim that the FCC lacks any authority at all to regulate BIAS. This is particularly significant to the state and local governments since the FCC also preempted (i.e., invalidated) their authority of localities to regulate BIAS. They argue that if the FCC can’t regulate BIAS, it also lacks the power to stop state and localities from doing so.

With respect to procedural violations, the briefs charge that the FCC committed numerous violations of the Administrative Procedure Act, which governs how the agency must solicit, manage, and consider public participation in the agency’s proceedings. Among other things, the National Hispanic Media Coalition, which is one of the petitioners, repeatedly attempted without success to introduce evidence about consumer complaints about BIAS provider practices under the 2015 rules. The brief says that the FCC’s failure to consider these complaints fatally undermines its determination about BIAS because they show that consumers view BIAS as a data service, and do not perceive it as including email and other components.

The briefs also point to several defects in the agency’s fact-finding as to the evidence it did consider. One of the most important of these claimed shortcomings was the agency’s finding that the 2015 rules had resulted in reduced broadband infrastructure investment. The briefs argue that the FCC erroneously relied on studies that contain serious methodological data flaws and ignored data submitted by the ISPs themselves that show that two-thirds of them actually increased capital investment after the issuance of the 2015 order.

In any legal case, it is wise to look at the counterarguments in opposing briefs before reaching conclusions as to the outcome of a case. However, the first round of briefing in the network neutrality case demonstrates that, at the least, there is a non-frivolous case for reversal.

Andrew Jay Schwartzman is the Benton Senior Counselor at the Public Interest Communications Law Project at Georgetown University Law Center's Institute for Public Representation (IPR). Since February 2014, Schwartzman has been writing a monthly column for the Benton Foundation’s Digital Beat blog on telecommunications and media policy issues. Drawing on his decades of experience in the field, Schwartzman provides analysis of the legal issues in the key communications debates of the day, highlighting how law and policymaking interact. Find all of Schwartzman's articles here.

By Andrew Jay Schwartzman.