Why Court Very Likely Will Stay FCC’s Title II Reclassification

Based on the latest best arguments this week from both the FCC and broadband petitioners, the D.C. Circuit Court of Appeals is very likely to partially stay the FCC Open Internet Order’s reclassification of broadband as a Title II service and imposition of a new Internet conduct standard -- in the coming weeks.

That’s because a close comparison of the broadband industry’s latest best arguments in its petition for a court stay with the FCC’s latest best counter-arguments in denying the broadband industry’s petitions for an FCC stay -- exposes how extraordinarily weak the FCC’s legal justification is.  

Normally, winning a court stay of a Federal Government decision has a low probability of success because petitioners must overcome the high legal bar of convincing the court that they are likely to win on the merits and that they would suffer irreparable harm.

This is no normal case.

First, on the merits, the FCC’s legal case proves extraordinarily flawed on: court deference, findings of fact, FCC/Court/Supreme Court precedents, the law, and APA due process. Second on irreparable harm, petitioners present real, substantial, documentable and unrecoverable costs, which easily overwhelm the FCC’s few largely hypothetical, anecdotal, unsupported, and unquantifiable harms, because the petitioners are not asking for a stay of the FCC’s net neutrality rules, of no blocking, throttling, and paid prioritization, or a stay of the FCC’s Section 706 authority to protect consumers.

For those who doubt that the FCC’s legal case could be this weak please read and compare the FCC’s best summary arguments versus the industry’s best summary counter-arguments – like the judges essentially will.

• (Background Note:  After analyzing the FCC’s legal justification for Title II before and after the publication of the FCC’s Open Order in March, I predicted the order would be highly vulnerable in court. After analyzing the telecom & cable petitions for a partial stay last week, I then predicted a better than even chance the court could grant a partial stay of Title II reclassification. This analysis -- of the FCC’s latest best arguments versus the industry’s latest best arguments -- results in increased confidence the court will very likely grant a partial stay of the Title II part of the FCC Order.)  

 

Why the FCC’s Title II legal justification is extraordinarily fragile and weak.

First, the industry’s petition eviscerates the FCC’s main line of defense, which presumes “carte blanche” Chevron Deference to empower the FCC to repudiate and reverse multiple past FCC findings of fact, five FCC precedents and one Supreme Court precedent without “substantial justification,” in order to redefine broadband information services to be only telecommunications end-to-end.

Specifically, the circus tent-pole assumption supporting the FCC’s whole case here is whether the FCC now has the authority and administrative latitude to redefine broadband service from an un-regulated Title I information service to a Title II common carrier telecommunications service.

Contrary to the FCC’s presumption that the FCC as the expert agency is due broad Chevron Deference for interpreting “ambiguous” law, the specific interpretation at issue here is now essentially settled legal precedent.

All 9 Supreme Court Justices in the seminal Brand X decision on this matter in 2004 agreed that offering Internet access is, according to Section 230 of the 1996 Telecom Act, bydefinition an information service.

Compounding the FCC’s legal jeopardy on this point is that the evidence proves the FCC’s interpretation to be an unreasonable interpretation of the well-developed facts in five prior consistent FCC precedents that found broadband service met all eight independent parts of the statutory information service definition. This is not an “ambiguous” grey area any more, but consistently settled precedent.

The FCC’s legal position here confronts even more legal peril because the FCC’s legal view “lacks any limiting principle” which is necessary for an interpretation of statutory authority to be legal.

This is especially problematic in this case, because this D.C. Court of Appeals has already overturned the FCC twice before for effectively asserting unlimited Internet regulatory authority in 2010 in Comcast v. FCC and again 2014 in Verizon v. FCC. The FCC comes before this court as an unrepentant overreach recidivist imagining the court has no memory.  

The FCC’s presumption of sweeping court deference here is even further undercut by the transparently political nature of the FCC’s decision-making process in this matter.

Chevron deference is due for administrative convenience on administrative matters of ambiguous law. The petition for a stay presents substantial evidence that a “sharply divided” FCC reversed decades of consistent bipartisan precedent in support of a light touch information services classification of Internet service.

The obvious sequence of facts are: that the original FCC NPRM did not originally plan to reclassify broadband to be Title II; that there were White House meetings on how to exert influence on the FCC on the Title II matter; that the President publicly called for Title II regulation of the Internet as a utility; and that a few months later a “sharply divided” FCC voted to implement the President’s view.

The obvious appearance that the FCC’s Open Internet Order is a big political reversal of longstanding bipartisan Internet policy on a partisan basis without Congress, undercuts the FCC’s legal contention that it is engaged in a mere administrative interpretive action worthy of maximal Chevron deference from the courts.  

In short, the FCC’s circus tent-pole assumption supporting its entire Title II case is in serious legal jeopardy.    

 

 

Second, in the important context of a request for a stay that must balance net harms, please consider how vastly different the petitioners and the FCC frame what “the status quo” actually is here.

Which reality do you think the court will most likely believe?

Will the court believe as the petitioners represent, that the Title II reclassification change is a big policy change with large net commercial harms?  Or will they see it as the FCC represents, as an administrative “backstop” to maintain the legality of the FCC’s Open Internet policy with minimal harms and a net public interest benefit?

Petitioners’ Status Quo Reality

Will the Court believe the petitioners’ frame of a big factual change in the status quo?

• Is the FCC changing from a longstanding bipartisan Internet policy driven by Congress to a partisan Internet policy driven by the White House and FCC?
• Is the FCC changing from Title I light touch Internet regulation, to Title II common carrier regulation?
• Is the FCC changing from a policy that resulted in normal and predictable business liability, to a policy that results in increased and unpredictable business liability by encouraging class action lawsuits in most all aspects of the broadband business? 
• Is the FCC changing from a policy that encouraged ~$800b in broadband investment in a decade, to an economic regulation policy that inherently discourages investment by increasing economic uncertainty over expected return on investment?  
• Is the FCC changing from a policy that has long respected commercial reliance interests in infrastructure investment, to a policy that effectively does not recognize that any substantial commercial reliance interests even exist in infrastructure investment?
• Is the FCC changing from a policy that never had regulated the Internet backbone market, to a one-sided common carrier policy where longstanding commercially-negotiated interconnection agreements can all be challenged as unjust or unreasonable?

In addition, will the court believe the other big changes in the status quo that the petitioners spotlight?

• Has the FCC created “out of whole cloth a ‘Title II tailored for the 21^st Century’” without Congress?
• Has the FCC rewritten its mobile service rules to overrule Congress’ clear intent in the law twice?
• Has the FCC redefined broadband to selectively change the legal status of only ISPs?
• Has the FCC adopted a new one-sided vague Internet conduct standard that ISPs must follow, and everyone else can sue ISPs for violating?

In short, will the court believe the petitioners’ core position that the FCC Title II reclassification is a big change in the status quo that implicates vast, real, substantial, documentable and unrecoverable net costs?

Or will the court believe the FCC’s opposite factual view of the status quo?

FCC’s Status Quo Reality

• Will the court believe the FCC that its Title II decision is little change in the status quo, because as it states in its denial of the petitioners’ request for an FCC stay, that “the Commission’s Order maintains the status quo of an Open Internet, which the Commission has committed to protect and promote since 2005?”
• Will the court believe the FCC’s position that its Title II reclassification of broadband service is not a big change in Internet policy but an administrative reinterpretation of ambiguous law worthy of court deference, in order to bolster its regulatory authority to protect the public interest?
• Will the court believe the FCC that the President’s public call for the “strongest possible” Title II utility regulations of broadband did not influence only the FCC democrat majority to impose Title II regulation on broadband ISPs?
• Will the D.C. Court of Appeals believe the FCC that it needed Title II to enforce net neutrality, when the broadband industry is not challenging the net neutrality rules and when this court drew a roadmap for the FCC to enforce net neutrality under its section 706 authorities in Verizon v. FCC?
• Will the court believe the FCC and its evidence in its Order (paras. 409-425), that a change in broadband providers’ legal status to Title II economic regulation will not discourage their future rate of investment in Internet infrastructure?
• Will the court believe the FCC’s harms analysis, that there are no real reliance interests at risk here at all, because the FCC’s imposition of Title II economic regulation will not affect ISPs infrastructure investment incentives? 
• Will the court believe that the FCC’s ‘Title II tailored for the 21^st Century’ that forbore from many of the onerous Title II provisions, succeeded in replicating the previous status quo, so the newly-created FCC status quo did not really change the previous FCC status quo? (If the FCC’s logic is hard to follow, you get the point.)
• Will the court believe the FCC’s assertion that they have no interest in ex ante price regulation of broadband when there is no statutory limitation on the FCC’s asserted Title II authority?
• Will the court believe the that the FCC’s asserted need to prevent future undefined potential harms to the Open Internet by ISPs, is on balance greater than the petitioners’ documented harms from Title II?

In short, will the court believe the FCC’s core position that the FCC Title II reclassification is not a big change in the status quo and that the FCC’s assessment that a stay of the FCC’s Title II reclassification and Internet conduct standard would harm the public interest?

Comparing the two, I believe when the court looks at this case through a court stay lens of what view really maintains the actual status quo with the least harm, they will accept the petitioners’ more accurate and realistic frame of the status quo.

 

Third, there are many more strong arguments that independently and additionally imperil the FCC’s Title II reclassification and augur for a grant of a partial stay.

Probably the most egregious and vulnerable part of the FCC’s order is applying Title II common carrier regulation to wireless. The FCC directly contravenes two different clear congressional prohibitions of treating private mobile providers as common carriers. And the FCC makes obvious its “results oriented reasoning” by going to the preposterous length of redefining the Internet to be the Public Switched Telephone Network (PSTN) when Congress has repeatedly made it clear they are not one in the same.

Further imperiling the FCC’s Title II reclassification is that it is built upon several serious arbitrary and capricious actions, and that it required the FCC to violate the APA in several ways.

 

 

In conclusion, the D.C. Circuit Court of Appeals is very likely to grant a stay of the FCC’s Title II reclassification and its new Internet conduct standard in the FCC’s Open Internet Order.

By not requesting a stay of the FCC’s existing bright line net neutrality rules banning blocking, throttling, and paid prioritization, and by not asking for a stay of the FCC’s Section 706 Internet regulatory authority, the petitioners effectively eliminate consumer harms from the balance of harms equation.

In a nutshell, the petitioners successfully eviscerate the FCC’s weak legal justification for Title II reclassification and a new Internet conduct standard.

Most all of the FCC’s case is based on the constant presumption that the courts must show the FCC sweeping deference as the “expert agency.” The FCC’s case can be aptly encapsulated as ‘this particular FCC always knows best.’ Moreover, the FCC’s repeated legal justifications can be aptly encapsulated as ‘because this FCC says so.’ Furthermore, the FCC also claims king-like powers that allow it to act arbitrarily and capriciously and to wholesale ignore the APA.

Simply, the FCC is its own worst enemy.

Its legal justification is so weak because the FCC majority obviously decided to do what it wanted politically and quickly with little regard to common sense, prior FCC’s repeated findings of facts and definitional precedents, appeals court and Supreme Court precedents, the Communications Act, The Administrative Procedures Act, and the Constitution.

The FCC is in for a very rough day in court.  

***

 

FCC Open Internet Order Series

Part 1: The Many Vulnerabilities of an Open Internet [9-24-09]

Part 2: Why FCC proposed net neutrality regs unconstitutional, NPR Online Op-ed [9-24-09]

Part 3: Takeaways from FCC's Proposed Open Internet Regs [10-22-09]

Part 4: How FCC Regulation Would Change the Internet [10-30-09]

Part 5: Is FCC Declaring 'Open Season' on Internet Freedom? [11-17-09]

Part 6: Critical Gaps in FCC's Proposed Open Internet Regulations [11-30-09]

Part 7: Takeaways from the FCC's Open Internet Further Inquiry [9-2-10]

Part 8: An FCC "Data-Driven" Double Standard? [10-27-10]

Part 9: Election Takeaways for the FCC [11-3-10]

Part 10: Irony of Little Openness in FCC Open Internetg-making [11-19-10]

Part 11: FCC Regulating Internet to Prevent Companies from Regulating Internet [11-22-10]

Part 12: Where is the FCC's Legitimacy? [11-22-10]

Part 13: Will FCC Preserve or Change the Internet? [12-17-10]

Part 14: FCC Internet Price Regulation & Micro-management? [12-20-10]

Part 15: FCC Open Internet Decision Take-aways [12-21-10]

Part 16: FCC Defines Broadband Service as "BIAS"-ed [12-22-10]

Part 17: Why FCC's Net Regs Need Administration/Congressional Regulatory Review [1-3-11]

Part 18: Welcome to the FCC-Centric Internet [1-25-11]

Part 19: FCC's Net Regs in Conflict with President's Pledges [1-26-11]

Part 20: Will FCC Respect President's Call for "Least Burdensome" Regulation? [2-3-11]

Part 21: FCC's In Search of Relevance in 706 Report [5-23-11]

Part 22: The FCC's public wireless network blocks lawful Internet traffic [6-13-11]

Part 23: Why FCC Net Neutrality Regs Are So Vulnerable [9-8-11]

Part 24: Why Verizon Wins Appeal of FCC's Net Regs [9-30-11]

Part 25: Supreme Court likely to leash FCC to the law [10-10-12]

Part 26: What Court Data Roaming Decision Means for FCC Open Internet Order [12-4-12]

Part 27: Oops! Crawford's Model Broadband Nation, Korea, Opposes Net Neutrality [2-26-13]

Part 28: Little Impact on FCC Open Internet Order from SCOTUS Chevron Decision [5-21-13]

Part 29: More Legal Trouble for FCC's Open Internet Order & Net Neutrality [6-2-13]

Part 30: U.S. Competition Beats EU Regulation in Broadband Race [6-21-13]

Part 31: Defending Google Fiber's Reasonable Network Management [7-30-13]

Part 32: Capricious Net Neutrality Charges [8-7-13]

Part 33: Why FCC won't pass Appeals Court's oral exam [9-2-13]

Part 34: 5 BIG Implications from Court Signals on Net Neutrality - A Special Report [9-13-13]

Part 35: Dial-up Rules for the Broadband Age? Op-ed Rebutting Marvin Ammori's [11-6-13]

Part 36: Nattering Net Neutrality Nonsense Over AT&T's Sponsored Data Offering [1-6-14]

Part 37: Is Net Neutrality Trying to Mutate into an Economic Entitlement? [1-12-14]

Part 38: Why Professor Crawford Has Title II Reclassification All Wrong [1-16-14]

Part 39: Title II Reclassification Would Violate President's Executive Order [1-22-14]

Part 40: The Narrowing Net Neutrality Dispute [2-24-14] 

Part 41: FCC’s Open Internet Order Do-over – Key Going Forward Takeaways [3-5-14]

Part 42: Net Neutrality is about Consumer Benefit not Corporate Welfare for Netflix [3-21-14]

Part 43: The Multi-speed Internet is Getting More Faster Speeds [4-28-14]

Part 44: Reality Check on the Electoral Politics of Net Neutrality [5-2-14]

Part 45: The “Aristechracy” Demands Consumers Subsidize Their Net Neutrality Free Lunch [5-8-14]

Part 46: Read AT&T’s Filing that Totally Debunks Title II Reclassification [5-9-14]

Part 47: Statement on FCC Open Internet NPRM [5-15-14]

Part 48: Net Neutrality Rhetoric: “Believe it or not!” [5-16-14]

Part 49: Top Ten Reasons Broadband Internet is not a Public Utility [5-20-14]

Part 50: Top Ten Reasons to Oppose Broadband Utility Regulation [5-28-14]

Part 51: Google’s Title II Broadband Utility Regulation Risks [6-3-14]

Part 52:  Exposing Netflix’ Biggest Net Neutrality Deceptions [6-5-14 

Part 53: Silicon Valley Naïve on Broadband Regulation (3 min video) [6-15-14]

Part 54: FCC’s Netflix Internet Peering Inquiry – Top Ten Questions [6-17-14]

Part 55: Interconnection is Different for Internet than Railroads or Electricity [6-26-14]

Part 56: Top Ten Failures of FCC Title II Utility Regulation [7-7-14]

Part 57: NetCompetition Statement & Comments on FCC Open Internet Order Remand [7-11-14]

Part 58: MD Rules Uber is a Common Carrier – Will FCC Agree? [8-6-14]

Part 59: Internet Peering Doesn’t Need Fixing – NetComp CommActUpdate Submission [8-11-14]

Part 60: Why is Silicon Valley Rebranding/Redefining Net Neutrality?  [9-2-14]

Part 61: the FCC’s Redefinition of Broadband Competition [9-4-14]

Part 62: NetCompetition Comments to FCC Opposing Title II Utility Regulation of Broadband [9-9-14]

Part 63: De-competition De-competition De-competition [9-14-14]

Part 64: The Forgotten Consumer in the Fast Lane Net Neutrality Debate [9-18-14]

Part 65: FTC Implicitly Urges FCC to Not Reclassify Broadband as a Utility [9-23-14] 

Part 66: Evaluating the Title II Rainbow of Proposals for the FCC to Go Nuclear [9-29-14]

Part 67: Why Waxman’s FCC Internet Utility Regulation Plan Would Be Unlawful [10-5-14]

Part 68: Silicon Valley’s Biggest Internet Mistake [10-15-14]

Part 69: Will the FCC Break the Internet? [10-22-14]

Part 70: Net Neutrality Has Become an Industrial Policy [10-31-14]

Part 71: The Federal Communications Congress? [11-7-14]

Part 72: The Top Ten Adjectives to Describe Net Neutrality [11-11-14]

Part 73: Top Ten Questions to Ask About Title II Regulation of the Internet [11-20-14]

Part 74: The Only Legitimate FCC Hybrid Net Neutrality Approach [12-1-1

Part 75: Who Pays for Net Neutrality? [12-3-14]

Part 76: Top Ten Deficiencies in FCC’s Title II Record [12-8-15]

Part 77: FCC Title II Internet Regulation: “Believe it or not!” [12-17-14]

Part 78: The FCC Is Unnecessarily Undermining its Legitimacy [12-18-14]

Part 79: NetCompetition Statement on New FCC Net Neutrality Legislation [1-16-15]

Part 80: Need for Modernizing Communications Law – Seeing the Forest for the Trees [1-18-15]

Part 81: Why the FCC Needs Congress [1-25-15]

Part 82: NetCompetition on FCC Publicll sharing its Proposed Open Internet Order [1-23-15]

Part 83: The FCC’s De-Americanization of the Internet [1-25-15]

Part 84: Testing the FCC’s Net Neutrality Calculus [1-28-15]

Part 85: Net Neutrality Bait & Switch to Title II [2-3-15]

Part 86: FCC Internet Utility Regulation Is a Really Stupid Idea [2-9-15]

Part 87: The FCC Is Not Neutral [2-17-15]

Part 88: Title II Protectionism Will Hurt Google & Silicon Valley in EU [2-19-15]

Part 89: The FCC’s Predictable Fiasco of Internet Utility Regulation [2-24-15]

Part 90: Why FCC Will Lose in Court on Title II Internet (80%) – A Legal House of Cards [3-2-15]

Part 91: FCC Title II Protectionism Creates a U.S. Digital Single Market like EU’s [3-11-15]

Part 92: NetCompetition on FCC Title II Internet Order [3-12-15]

Part 93: FCC’s Title II Legal Case is Modern Version of “The Emperor Has No Clothes”

Part 94: Unnecessary Collateral Damage from FCC Title II Internet Regulation [3-26-15]

Part 95: Nationalistic Net Neutrality Naiveté [4-10-15]

Part 96: ObamaNet vs EuroNet -- “Competing” Protectionist Industrial Policies [4-24-15]

Part 97: FCC’s New Do Not Track Authority [4-27-15]

Part 98: Expect Court to Partially Stay FCC’s Title II Internet Reclassification [5-4-15]