United States Telecom Assoc. v. FCC [Order In Slip Opinion Format]
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Full Opinion
dissenting from the denial of rehearing en banc:
An independent federal agency sits at the intersection of the road to the White House and Constitution Avenue. Two statues that capture struggle between man and horse flank the agency. The statues are called âMan Controlling Trade,â and they depict a man, the government, restraining a horse, the marketplace. Though the statues look similar, they are not the same. On the Presidentâs road, the horseâ the marketplace â looks threatening, as if it will topple the brawny man trying to grasp the reins. On Constitution Avenue, the man â the government â is the threatening one, grasping the reins on both sides of the animalâs head; it appears he is trying to overpower a valiant and sympathetic horse. Here, as with the statues, an independent agency sits at the crossroads of competing visions â the Presidentâs view of the Internet as threatening consumers, and the libertarian view of government as strangling the greatest market innovation of the last century. But an orthodox view of checks and balances leaves the choice of vision to Congress.
Congress passed, and President Clinton signed, the Telecommunications Act of 1996 (the âActâ), and its meaning could not be clearer: âto preserve the vibrant and competitive free market that presently exists for the Internet ..., unfettered by Federal or State regulation.â 47 U.S.C.
When the FCC followed the Verizon âroadmapâ to implement ânet neutralityâ principles without heavy-handed regulation of Internet access, the Obama administration intervened. Through covert and overt measures, FCC was pressured into rejecting this decades-long, light-touch consensus in favor of regulating the Internet like a public utility. This sea change places the Commission in control of Internet access. G. Nagesh & B. Mullins, Net Neutrality: How White House Thwarted FCC Chief, Wall St. J. (Feb. 4, 2015).
Abandoning Congressâs clear, deregula-tory policy does more than subject Internet access to a regulatory framework fit for the horse and buggy. The FCCâs statutory rewrite relegates the Constitutionâs vital separation of powers framework to âa mere parchment delineation of the boundaries;â a hollow guarantee of liberty. See The Federalist No. 73 (Hamilton), p. 441 (Clinton Rossiter ed., 1961). If we take the Constitutionâs structural restraints seriously, we cannot wish the Commission bon voyage on its Presidentially-imposed journey to become the Federal Cyberspace Commission. As that is exactly what the Courtâs Opinion does, I respectfully dissent from the denial of rehearing en bane.
I.
The Actâs Deregulatory Structure
Congress passed the Telecommunications Act of 1996 to amend the Communications Act of 1934, and in doing so, protect the innovation animating the Internet. See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (âAn Act [t]o promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.â). The Act found that the âInternet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation.â 47 U.S.C. § 230(a)(4) (emphasis added). Accordingly, Congress made keeping the Internet âunfetteredâ by âregulationâ our national policy. Id. § 230(b)(2). Achieving this policy required a commitment to deregulatory tools and standards. The Act provided exactly that.
A
Internet Access As An Information Service
' As the Supreme Court explained, the 1996 Act incorporated FCCâs prior practice of distinguishing âbasic services,â
âBasic services,â the analogue to the 1996 Actâs âtelecommunications services,â were defined as âa pure transmission capability over a communications path that is virtually transparent in terms of its interaction with customer supplied information.â Id. âIN]o computer processing or storage of the informationâ was part of âbasic services,â âother than the processing or storage needed to convert the message into electronic form and then back into the ordinary language for purposes of transmitting it over the network â such as a telephone or facsimile.â Id. (emphasis added). The FCC, and then Congress in 1996, subjected these âbasic services,â these âtelecommunications services,â to common carrier regulation. Id.
âEnhanced servicesâ are the analogue to âinformation servicesâ in the 1996 Act, and they are not subject to common carrier regulation. Id. at 977, 125 S.Ct. 2688. The Commission historically defined âenhanced servicesâ to be those where âcomputer processing applications [were] used to act on the content, code, protocol, and other aspects of the subscriberâs information,â like voicemail. See id. at 976-77, 125 S.Ct. 2688. The regulatory rub with âenhanced service,â as it is here with Internet access, is that it may be âoffered via transmission wiresâ that, themselves, may constitute a âbasicâ or âtelecommunications service.â See id. at 977, 125 S.Ct. 2688. Nevertheless, âgiven the fast-moving, competitive marketâ in which [enhanced services] were offered,â the FCC did not subject them to common carrier regulation. Id.
Just so, when Congress exempted âinformation servicesâ from common carrier regulation in 1996, it followed the FCCâs longstanding course. See id. at 992, 125 S.Ct. 2688 (âCongress passed the definitions in the Communications Act against the background of this regulatory history, and we may assume that the parallel terms âtelecommunications serviceâ and âinformation serviceâ substantially incorporated their meaning, as the Commission has held.â). The statute says âinteractive computer serviceâ includes âanyâ provider of âinformation service,â and âspecifically a service or system that provides access to the Internet.â See 47 U.S.C. § 230(f)(2) (emphasis added). The Act also specifically excludes âtelecommunications servicesâ from the definition of âInternet access service.â Id. § 231(e)(4).
Unsurprisingly, the Actâs definition of âinformation serviceâ fits broadband Internet access like a glove. â[Generating, acquiring, storing,â or âmaking available information via telecommunicationsâ is what users do on social media websites like Facebook. See id. § 153(24). â[Transformingâ or âutilizingâ âinformation via telecommunicationsâ is what users do on YouTube. See id. â[A]cquiring, storing,â and âretrieving ... information via telecommunicationsâ is what users do with email. See id. The âoffering of a capabilityâ for engaging in all of these activities is exactly what is provided by broadband Internet access. See id.
B.
Authority To Forbear Burdensome Regulations
Before the 1996 Act, FCC sought to deregulate aspects of the telecommunica
The authority to forbear regulation is limited to certain circumstances. FCC is only permitted to forbear when it has shown the common carriage provision is not needed: (1) to ensure just and reasonable prices and practices; or (2) to protect consumers. Forbearance must also be in the public interest. See 47 U.S.C. § 160(a).
C.
Mobile Broadband Cannot Be Common Carnage
The 1996 Act also ensured providers of mobile broadband Internet access âshall not ... be treated as a common carrier for any purpose.â See 47 U.S.C. § 332(c)(2) (emphasis added). Section 332 specifies only a commercial mobile service (or a âfunctional equivalentâ) can be subject to common carrier regulation. Id. §§ 332(c)(1)(A), (c)(2), (d)(3). âPrivate mobile service,â in contrast, is âany mobile serviceâ that is not a commercial one, and it may not be regulated as a common carrier. See id. § 332(d)(3). Section 332 defines âcommercial mobile serviceâ as a mobile service âprovided for profit [that] makes interconnected service available [to the public].â Id. § 332(d)(1). The section then defines âinterconnected serviceâ as a âservice that is interconnected with the public switched network (as such terms are defined by regulation by the [FCC]).â Id. § 332(d)(2). The FCC â until the Order at issue here â always defined âinterconnected serviceâ as âgiv[ing] subscribers the capability to communicate ... [with] all other users on the public switched network.â See 47 C.F.R. § 20.3 (1994) (emphasis added). â[T]he public switched networkâ was, in turn, defined as the âcommon carrier switched network ... that use[s] the North American Numbering Plan.â Id. In other words, âthe public switched networkâ is the telephone network. Though it is legislative history, the 1996 Actâs Conference Report buttresses this textual reading. See H.R. Rep. No. 103-213, at 495 (1993) (characterizing the House version of Section 332 as interconnection with âthe Public switched telephone network,â even as both the House and Senate versions of Section 332 referred to âthe public switched networkâ) (emphasis added), reprinted in 1993 U.S.C.C.A.N. 1088, 1184. Moreover, § 332(d)(2) refers to one network: âthe public switched network.â In other words, the fact that another network can connect to the telephone network does not make that other network part of âthe public switched network.â
FCC Practice Preserved The Free Market For Internet Access
It is bizarre that the FCC is now disputing the notion that Congress would âattempt to settle the regulatory status of broadband Internet access servicesâ with the 1996 Act. See Op. 410-11. Barely more than a year after the 1996 Act, Congress charged the FCC with assessing âthe definitions of âinformation serviceâ ... [and] âtelecommunications serviceâ â in the Act, and âthe application of those definitions to mixed or hybrid services ... including with respect to Internet access.â See Depâts of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1998, Pub. L. No. 105-119, § 623, 111 Stat. 2440, 2521 (1997). What is this but inquiring into âthe regulatory statusâ of Internet access in the 1996 Act and whether Congress was satisfied with its scheme?
The Commissionâs report, known as the Universal Service Report, made several conclusions confirming the text, history, and structure of the 1996 Act properly classified Internet access service as âinformation service.â See, e.g., Federal-State Joint Board on Universal Service, Report to Congress, FCC 98-67, 13 FCC Rcd. 11501, 11513-14 ¶ 27, 11536-40 ¶¶ 74-82 (1998) (hereinafter Universal Service Report). In this report, the FCC also endorsed the view of five Senators saying â[n]othing in the 1996 Act or its legislative history suggests [] Congress intended to alter the current classification of Internet and other information services or to expand traditional telephone regulation to new and advanced services.â Id. at 11520 ¶¶ 38-39. As the Senatorsâ view parallels the conclusions reached within the Universal Service Report, and their view is quite prescient, their letter is worth quoting at length:
This unparalleled success [in Internet access] has emerged in the context of policies that favor market forces over government regulation â promoting the growth of innovative, cost-effective, and diverse quality services. It is this same pro-competitive mandate that is at the heart of the 1996 Act.... Simply put, Congress has not required the FCC to prepare and submit a Report on Universal Service that alters this successful and historic policy. Moreover, were the FCC to reverse its prior conclusions and suddenly subject some or all informar tion service providers to telephone regulation, it seriously would chill the growth and development of advanced sciences to the detriment of our economic and educational well-being.
Some have argued Congress intended that the FCCâs implementing regulations be expanded to reclassify certain information service providers, specifically Internet Service Providers (ISPs), as telecommunications carriers. Rather than expand regulation to new service providers, a critical goal of the 1996 Act was to diminish regulatory burdens as competition grew. Significantly, this goal has been the springboard for sound telecommunications policy throughout the globe, and underscores U.S. leadership in this area. The FCC should not act to alter this approach.
Letter from Senators John Ashcroft, Wendell Ford, John Kerry, Spencer Abraham, and Ron Wyden to the Honorable William E. Kennard, Chairman, FCC (Received Mar. 23, 1998), http://apps.fcc.gov/ecfs/ document/view?id=2038710001 (emphasis added).
The FCC heeded the Universal Service Reportâs, conclusions in subsequent Orders. In its Advanced Services Order, the FCC characterized the âlast mileâ of Digital Subscriber Line services (DSL services),
In 2002, the FCC issued its Cable Broadband Order. The Commission found that cable modem service âsupports such functions as email, newsgroups, maintenance of the userâs world wide web presence, and the DNS. Accordingly ... cable modem serviceâ is âan Internet access service,â making it âan information service.â See Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities; Internet Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities, FCC 02-77, 17 FCC Rcd. 4798, 4822 ¶ 38 (2002) {âCable Broadband Orderâ). This classification stood irrespective of the fact that âcable modem service provides the [enhanced service] capabilities described [ ] via âtelecommunications.â â Id. 4823 ¶ 39. In the case of cable modem service, â[t]he cable operator providing cable modem service over its own facilities ... is not offering telecommunications service to the end user, but rather is merely using telecommunications to provide end users with cable modem service.â Id. 4823-24 ¶ 41. The distinction between the services still stood, even as the nature of cable modem service rendered it an integrated âinformation service.â This confirms, again, what is of relevance here: the fact that an âinformation service,â like Internet access, has âtelecommunications servicesâ among its component parts does not per se make it a âtelecommunications service.â The Cable Broadband Order was at issue in Brand X.
A.
Brand X
In Brand X, the Supreme Court left the FCCâs âinformation serviceâ classification of cable-provided Internet access âunchallenged.â See 545 U.S. at 987-88, 125 S.Ct. 2688. Brand X also acknowledged, as FCC acknowledged in its prior Orders and in its briefing before the Brand X Court, âinformation service ... [is] the analog to enhanced serviceâ in the 1996 Act, and this âinformation serviceâ includes accessing the Internet. See 545 U.S. at 987, 125 S.Ct. 2688; see also FCC Brand X Reply Br. 5, No. 04-277 (Mar. 18, 2005) (explaining Internet access allows the user to âinteract[ ] with stored data ... maintained on the facilities of the other ISP (namely the contents of ... web pages, e-mail boxes, etc.)â). When explaining why cable modem service was an âinformation service,â the Brand X Court relied on cable modem service âproviding] consumers with a comprehensive capability for manipulating information using the Internet via high-speed telecommunicationsâ â namely, âenabling users, for example, to browse the World Wide Web .... [to] mateh[ ] the Web page addresses that end users type into their browsers (or âclickâ on) with the Internet Protocol (IP) addresses of the servers containing the Web pages the users wish to access.â Id. at 987, 125 S.Ct. 2688. Even as cable modem service relied on âtelecommunications serviceâ to bring this âinformation serviceâ to the end user,
Brand X cannot be read to render broadband Internet access a âtelecommunications service.â As the Supreme Court said, âthe entire question [in Brand Z] is whether the products here are functionally integrated or functionally separate.â Id. at 991, 125 S.Ct. 2688 (emphasis added). In other words, does the fact that cable modem service delivers the âinformation serviceâ of Internet access through a âtelecommunications serviceâ render the two services one âofferâ of âinformation service?â Or, is there one âofferâ of âtelecommunications serviceâ in the transmission and one âofferâ of âinformation serviceâ in the Internet access? To channel Justice Scaliaâs Brand X pizzeria analogy, the Brand X majority found cable modem service a single âofferâ of âinformation service,â or a pizzeriaâs single âofferâ of pizza and pizza delivery. Justice Scalia, in contrast, thought cable modem service contained âoffersâ of âtelecommunicationsâ and âinformationâ services, respectively, or separate âoffersâ of âpizza deliveryâ and âpizza.â No member of the Brand X Court disputed that what occurred at the Internet Service Providersâ computer-processing facilities constituted an âinformation service.â See 545 U.S. at 997-1000, 125 S.Ct. 2688; see also id. at 1009-11, 125 S.Ct. 2688 (Scalia, J., dissenting). Or, continuing the analogy, no 'member of the Brand X Court disputed that the pizzeria makes pizza. FCC would confirm that nothing in Brand X rendered Internet access itself a âtelecommunications service.â See Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, et al., FCC 05-150, 20 FCC Rcd. 14853, 14862 ¶ 12 (2005) (âInternet access service is an information serviceâ).
B.
Reclassification and Verizon
The FCC repeatedly affirmed the Actâs deregulatory approach toward mobile broadband Internet access as well. In 2007, the Commission said âmobile wireless broadband Internet access service does not fit within the definition of âcommercial mobile serviceâ â because it is not an âinterconnected serviceâ â it connects to the Internet and not the telephone network. See Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, FCC 07-30, 22 FCC Rcd. 5901, 5916 ¶ 41, 5917 (2007).
This Court was equally consistent about the status of mobile broadband Internet service. In Cellco Partnership v. FCC, 700
To be sure, this Court said in Verizon that, under Section 706 of the 1996 Act, the FCC ânever disclaimed authority to regulate the Internet or Internet providers altogether.â See id. at 638. Whatever the wisdom of Verizonâs interpretation of Section 706, the FCC did not âreclassify broadbandâ to implement ânet neutralityâ principles in that case. See id. at 633. In fact, as Judge Williams noted in dissent from the Courtâs Opinion here, âthe Verizon court struck down the rules at issue on the ground that they imposed common carrier duties on the broadband carriers, im-permissibly soâ under the Act. See Concurring & Dissenting Op. 770 (emphasis in original); see also Verizon, 740 F.3d at 650 (â[R]egulating broadband providers as common carriersâ would âobvious[ly] ... violate the Communications Act.â); see also id. at 656-59. Moreover, Verizon did not require the FCC to reclassify broadband in the future if the Commission wanted to implement any form of ânet neutrality.â Instead, Verizon identified FCC authority in Section 706 to implement some ânet neutralityâ regulations without reclassification (such as FCCâs âtransparency rules,â which the Verizon Court upheld). When crafting this Order, the Commission took note of Verizonâs conclusions.
In announcing the Order here, the FCC Chairman claimed the Order âproposedâ to âreinstate rules that achieve the goals of the 2010 Order using the Section 706-based roadmap laid out by the court [in Verizon].â See Notice of Proposed Rulemaking, FCC 14-61, 29 FCC Rcd. 5561, 5647 (2014) (statement of Chairman Tom Wheeler). No statement from the FCCâ until after the President intervened, that is â ever suggested the Commission felt compelled by Verizon to reclassify broadband if it wanted to implement any ânet neutralityâ principles. Indeed, when the Notice of Proposed Rulemaking explained the contours of the Orderâs ban on commercially unreasonable practices, it stated the following as FCCâs goal: â[CJodifying an enforceable rule to protect the open Internet that is not common carriage per se.â See id. at 5599, Subpart III.E (capital-izations omitted) (emphasis added). The Notice of Proposed Rulemaking made similar statements with respect to its revisions to the âno-blockingâ rule after Verizon. See id. at 5595 ¶ 95.
Verizon found the FCCâs proper Section 706 authority consistent with âthe backdrop of the Commissionâs long [regulatory] history.â See 740 F.3d at 638. That âbackdropâ led Verizon to say: âCongress clearly contemplated that the Commission would continue regulating Internet providers in the manner it had previously.â Id. at 639. Before the Presidentâs intervention in this Order and in light of Verizon, the Commission was going to do exactly that. But by reclassifying broadband Internet access as common carriage, âthe circumstancesâ of this Order are âentirely differentâ from what Verizon considered. See id. at 638.
III.
The Order Here Lacks Congressional Authorization
The Order at issue gives FCC the authority to regulate âall users of public IP addresses,â or everything that connects to the Internet. See In the Matter of Protecting and Promoting the Open Internet
Both reclassifications ensure.what the Court calls âconsistent regulatory treatmentâ of mobile and fixed broadband Internet access. See Op. 724. By âconsistent regulatory treatment,â the Court means the FCC can treat Internet access like monopolist railroads and telephone services â as a common carrier subject to public utility regulation. The innovation of modern technology now falls prey to the regulatory labyrinth smothering the old.
Subjecting all broadband Internet access to common carrier regulation lets FCC decide how to apply onerous requirements on Internet access. This authority covers all the ways in which Internet Service Providers conduct and run their respective businesses. The Order gives the FCC authority to determine, case-by-case, whether any activities âunreasonably interfere with or unreasonably disadvantage the ability of consumers to reach the Internet content, services, and applications of their choosing.â Order ¶ 135. FCC is empowered to assess the âreasonablenessâ of all rates, terms, and practices of Internet Service Providers. See, e.g., id. ¶¶ 441-52, 512, 522. The Order also includes an outright ban on several practices, including: âthrottling,â or slowing Internet service down, id. ¶ 119; blocking access to certain Internet content; and on individualized negotiation of Internet access between content owners and Internet Service Providers (called âpaid prioritizationâ), id. ¶ 125. Some practices are explicitly left for the FCC to address in the future, like not charging end customers for the data used by certain applications or Internet services (âzero ratingâ), and sponsored-data plans, id. ¶¶ 151-53. In short, the Order establishes the FCCâs long-term authority over Internet access.
The FCCâs unheralded assertion of power has already led some smaller Internet Service Providers to âcut[ ] back on investments [in broadband Internet access].â See Statement of FCC Commissioner Ajit Pai On New Evidence That President Obamaâs Plan To Regulate The Internet Harms Small Businesses And Rural Broadband Deployment (May 7, 2015), http://go.usa. gov/3wAkn. I doubt they will be the last Providers to lessen their investments in Internet access, or to attempt navigating their business practices around FCC regulation. The Courtâs Opinion is blasĂ© about grafting public utility regulation on to an innovative enterprise. See Op. 734. But, the conceit of regulatory capture is often fatal to growth, leading regulation to fail at its own aims by operating on only a pretense of knowledge. See F.A. Hayek, The Fatal Conceit: The Errors of Socialism 76 (W.W. Bartley, III ed. 1991) (âThe curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.â).
Reclassifying broadband Internet access so as to subject it to common carrier regulation upends the Actâs core distinction between âinformation serviceâ and âtelecommunications service,â and it rewrites the statutory prohibition on treating mobile broadband providers as common carri
A.
The Major Question Of Reclassification Requires Clear Congressional Authority
One might be tempted to say turning Internet access into a public utility is obviously a âmajor questionâ of deep economic and political significance â any other conclusion would fail the straight-face test. But, the Court exhibits no such qualms. See Op. 704-05. Of course, the Opinion does not â and cannot â dispute the FCCâs Order implicates a âmajor question.â Indeed, the Court has already characterized ânet neutralityâ regulation as a âmajor question,â even without the distinct salience brought by implementing ânet neutralityâ through reclassifying broadband Internet access. See Verizon, 740 F.3d at 634 (âBefore beginning our analysis, we think it important to emphasize that ... the question of net neutrality implicates serious policy questions, which have engaged lawmakers, regulators, businesses, and other members of the public for years.... Regardless of how serious the problem an administrative agency seeks to address, ... it may not exercise its authority in a manner that is inconsistent with the administrative structure that Congress enacted into law.â). The problem here is the Courtâs analysis â it ignores the legal consequences flowing from the âmajor questionâ determination.
As Chief Justice John Marshall recognized long ago, there is a difference b