Net Neutrality Wars: The Court Strikes Back

A Legal Aside in a Digital Progress Institute Series

July 7, 2022

by Joel Thayer, President of The Digital Progress Institute

For almost twenty years, the idea of net neutrality has dominated tech and telecom discussions in DC. As our Contributing Fellow Kate Forscey has laid out in a series of blogs, Republicans and Democrats have agreed on the basic principles of net neutrality, but differed in how to formalize them—whether it be policy statements, light-touch rules, public-utility rules, or congressional legislation.

With the Supreme Court’s recent decision in West Virginia v. EPA, there may be a new hope for congressional legislation. Why? Because there the Court reaffirmed the basic premise that our Constitution requires a separation of powers, and that the proper forum for major political disputes should—and must be—Congress, not the administrative state. In other words, the Court appears unwilling to uphold regulations that circumvent the democratic process (or more formally, the constitutional requirements of bicameralism and presentment). Or to put it more bluntly: If Congress didn’t write it in, agencies can’t read it in.

For those of us enwrapped in the tech/telecom debates, that means courts are likely to look askance at any attempt by the Federal Communications Commission to adopt new net neutrality rules and seize regulatory authority over the Internet economy—at least without new legislation.

What the Court said

At the heart of the Court’s decision was the major questions doctrine, which says a court should not sanction an agency’s interpretation of a statute to expand its authority when the underlying claim of authority concerns an issue of “vast economic and political significance” unless Congress has clearly empowered the agency with authority over that issue. Utility Air Regulatory Group v. EPA, 573 U. S. 302, 324 (2014). The reason? As the late Justice Antonin Scalia put it, Congress “does not . . . hide elephants in mouseholes. Whitman v. American Trucking Associations, 531 U.S. 457, 468 (2001).

Although the Court formalized the doctrine for the first time in West Virginia v. EPA, the principle was nothing new. As the Court explained at length, it had previously applied the underlying principle against the Food and Drug Administration, FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120 (2000), the Environmental Protection Agency, Utility Air Regulatory Group v. EPA, 573 U. S. 302 (2014), the Centers for Disease Control and Prevention, Alabama Assn. of Realtors v. Department of Health and Human Servs., 594 U. S. ____ (2021), and even the Federal Communications Commission, MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U. S. 218, 229 (1994).

What the Court added was clarity on how and when the doctrine should apply. For example, many courts had attempted to incorporate the major questions doctrine into the traditional analysis of agency interpretation—that a court must defer to an agency’s reasonable interpretation of an ambiguous statute within its regulatory purview. Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). In West Virginia v. EPA, the Court got to the Chevron analysis, it never determined whether the statute was in fact even ambiguous. Instead, the Court made clear that the major questions doctrine is a Step-Zero analysis that must apply before even getting into Chevron. (Notably, this is not the first Step-Zero exception, see, e.g., United States v. Mead Corp., 533 U.S. 218 (2001).)

Practically, this means that courts can no longer jump to the question of a whether a statute is ambiguous when the agency asserts new authority. The onus will now be on the agency to show that a matter is not a major question and, if it is, then the agency must point to a clear delegation of that authority in the text of the statute rather than assuming deference.

The Return of the Net Neutrality Debate

So how does this apply to net neutrality? As a reminder, the net neutrality debates aren’t primarily about policy—every Internet service provider in the country appears to promise that it won’t block or throttle online content or applications (and the Federal Trade Commission has ample authority to take them to task if they’re lying). Instead, the question of net neutrality has long been a jurisdictional debate about whether Congress gave authority to the Commission to impose net neutrality rules (and also public-utility obligations) on Internet service providers.

Therein lies the rub.

For one, it’s hard to argue that the assertion of almost unbounded regulatory authority over Internet service providers isn’t a major question. After all, the Internet touches more than one sixth of our economy, and the debates over net neutrality and public-utility regulation have been fiercely political. Congress has considered net neutrality legislation (and legislation on public-utility regulation of Internet service providers) repeatedly with no agreement on how to move forward. And I am not alone in thinking that. Justice Brett Kavanaugh himself argued that the question of net neutrality and Internet service provider regulation was a major question when he was a judge on the D.C. Circuit Court of Appeals. United States Telecom Ass’n v. F.C.C., 359 F.3d 554 (D.C. Cir. 2004) (Kavanagh, J., dissenting from the majority). And the Court itself cited that very dissent in arguing that “Congress intends to make major policy decisions itself, not leave those decisions to agencies.” Slip Op. at 19.

For another, Congress did not include a clear delegation to the Commission to decide such a major question in the Communications Act or the Telecommunications Act (or in any other statute). As a reminder, the Court “expects Congress to speak clearly if it wishes to assign to an agency decision of vast economic and political significance.” Utility Air Regulatory Group v. EPA, 573 U. S. at 324. In other words, Congress does not delegate authority over major questions through “modest words,” “vague terms,” or “subtle device[s],” Whitman, 531 U. S. at 468, nor does it use oblique language to give agencies authority to make a “radical or fundamental change” to a statutory scheme, MCI v. AT&T, 512 U.S. at 229.

That’s one reason why the courts struck down the Commission’s first and second attempts to enforce and regulate net neutrality, despite reliance by the Commission on a bevy of provisions to bolster it’s case—and those courts didn’t even look to the major questions doctrine (it hadn’t been formalized!), the agency failed even under the deferential Chevron-framework.

And while one court finally did uphold the Commission’s net neutrality rules (based on a reinterpretation of the phrase “telecommunications service” in the definitions section of the Act), there’s reason to think that may not hold water under West Virginia v. EPA. First, the Commission had consistently (until 2015) held that that definition did not include the services of broadband Internet service providers–with decisions spanning the better course of twenty years. Second, that definition does not explicitly bring broadband Internet services into its purview, whereas Congress described broadband as “advanced telecommunications capability” or “advanced information services” elsewhere in the Telecommunications Act of 1996 (which added the definition). And since the 1990s, Congress has been explicit when it wants to regulate broadband, using that very word to require broadband mapping (Broadband DATA Act) or the deployment of broadband infrastructure (Infrastructure Investment and Jobs Act). In other words, Congress knows how to delegate authority over broadband to the Commission—but it’s only done so in narrow circumstances. So did Congress delegate authority over one sixth of the American economy through a definitional section that the agency did not think applied to Internet service providers for almost twenty years? If anything is clear, it’s that Congress didn’t. Third, and making matters worse, such an assertion of authority would run directly contrary to what Congress did clearly say about broadband. Specifically, Congress wrote that term “interactive computer service” meant an “information service” (the opposite of a “telecommunications service”) and then “includ[ed] specifically a service or system that provides access to the Internet.” 47 U.S.C. § 230(f)(2). And it went on to state the “policy of the United States . . . [is] to preserve the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation . . . .” 47 U.S.C. § 230(b)(2) (emphasis added). Even if that language was plausibly ambiguous enough for Chevron deference, it’s hard to discern the clear delegation of authority required by West Virginia v. EPA.

Now to be fair, some people disagree. I’ve read, for example, that the Court’s direct quote from Kavanaugh’s dissent on net neutrality can be ignored. What’s really important (or so the argument goes—and bear with me) is its citation of another case (Gonzales v. Oregon, 546 U. S. 243 (2006)), which itself (in a portion not quoted or cited by the Court) cited another case (NCTA v. Brand X, 545 U.S. 967 (2005)), which upheld the FCC’s decision to disclaim authority over broadband Internet service providers. To be frank, I don’t quite follow the logic—or see how an oblique citation-chain about the Commission correctly finding it did not have regulatory authority somehow translates into a clear delegation by Congress.

A New Hope for Congressional Legislation?

To be clear, none of this is to say we shouldn’t have net neutrality rules. We should, and such rules should straddle the full stack of Internet companies that have and do exercise market power in today‘s market. When Tim Wu coined the term net neutrality in 2002, Internet service providers were the proverbial bogeyman, Apple was a failing computer company, Google only had a search engine (and almost no revenues), and Facebook wasn’t even a dorm-room thing. Nowadays, the market power has shifted to the “edge,” and Big Tech openly exclaims that it is blocking and throttling lawful content that it finds objectionable.

With West Virginia v. EPA, I am hopeful that we can break the congressional impasse on true net neutrality legislation. That’s because the administrative state has for far too long served as way out of congressional compromise on net neutrality—no need for give and take, no need for hard votes. With legislation now the only option for net neutrality, I am hopeful that the United States can enshrine open Internet protections that address the full stack of the Internet economy and protect consumers no matter what platform or device or operating system or Internet service provider they use.