Network Neutrality: Now What?

The United States Court of Appeals for the District of Columbia Circuit has upheld the Federal Communications Commission’s network neutrality rules. So what does that mean, and what will happen now?

There is no shortage of analyses of what the two-judge majority and the partial dissenter said, such as this one and this one, so there is little value in discussing that in detail yet again. However, much less has been written about what will happen now and some of that has not been very thoughtful.

What are the most important things to know about the decision?

This was a sweeping vindication of the FCC and, unless modified on appeal, the decision gives the FCC a great deal of latitude to regulate broadband Internet service.

The centerpiece of the FCC’s rules is its decision to “reclassify” broadband Internet service to place it under the coverage of Title II of the Communications Act. This not only provides the authority to adopt strong network neutrality rules, but also allows the FCC to adopt and enforce strong rules on many other activities of Internet service providers (ISPs). Perhaps the most surprising thing about the case was that the court was unanimous on this aspect of the case, as well as its rejection of First Amendment challenges. While Judge Stephen Williams, a widely-respected jurist with a very conservative worldview, wrote a forceful dissent as to several parts of the majority’s holding, his somewhat begrudging agreement that the FCC has the power to regulate broadband under Title II(1) poses a major obstacle for network neutrality opponents.

Once it resolved the fundamental question of whether the FCC could reclassify broadband, the majority, over Judge Williams dissent, proceeded to address, and reject, numerous additional arguments challenging the FCC’s adoption of the network neutrality rules themselves. Except for the core holding on reclassification, other parts of the decision don’t break new legal ground. Even so, the majority’s decision adds weight to arguments the FCC can make in many other cases as to the degree of deference to which it is entitled in construing statutes and in making findings of fact and applying them to its statutory framework.

What are the next steps in the litigation?

As might be expected in a case like this, the losing parties quickly promised that they would appeal, and many posts about the case, such as this one, have indicated that the new decision is only an intermediate step because the matter will ultimately be resolved by the Supreme Court. That is somewhat misleading, because it is much more likely than not that neither the full D.C. Circuit Court nor the Supreme Court is likely to agree to review the decision.

Rehearing petitions must be filed with the D.C Circuit by July 29. Petitions for certiorari asking for Supreme Court review must be filed by September 14 or, if a rehearing petition is filed, 90 days after the Court of Appeals denies rehearing. Extensions are sometimes granted.

Rehearing by the full membership of the Court of Appeals.

Dissatisfied parties can ask the full membership of the Court of Appeals to “rehear” the decision of a panel of the court “en banc.” At least one of the parties of the case has said publicly that it intends to seek rehearing. In certain circumstances, even an unsuccessful petition for rehearing en banc can improve chances that the Supreme Court will agree to hear the case.

In this instance, the likelihood that the full D.C. Circuit would agree to rehear the case, much less reverse the panel’s decision, is extremely remote. The D.C. Circuit typically agrees to rehear a case only a few times each year, at most, usually where there is a sharp split on an important issue on which other circuits have taken a different stance. This case doesn’t meet those criteria and thus starts out as a particularly poor candidate for rehearing.

There are several other reasons that a vote to rehear the case isn’t in the cards. For one thing, one of the judges in the majority, Judge David Tatel, is considered to be highly knowledgeable on this issue and his colleagues will be loath to second-guess him. In addition, the issues on which Judge Williams dissented are garden variety administrative law questions which are extremely unlikely to merit rehearing. In addition, because of his age, Judge Williams is a “Senior” Judge, and will not participate in a key vote.

The math for obtaining rehearing is daunting. In the event a petition for rehearing is filed, any active judge, plus (because he sat on the case) Judge Williams, can ask for a vote. If, as is generally the case, no one asks a vote, the petition is denied. However, if there is a vote, only the active judges (i.e., not including Judge Williams) actually vote. Rehearing is granted only if a majority of the active judges - not a majority of the judges voting - want to rehear the case. There are currently eleven active judges, so agreement just to rehear the case, not reverse it, requires six votes. One of eleven - Judge Merrick Garland - has removed himself from all decision making as long as his Supreme Court nomination remains pending. Of the remaining ten, two wrote the decision and it is inconceivable they would want to agree to rehearing. So, a petitioner needs six of the eight remaining judges to vote for rehearing just to get the chance to reargue the case, much less convince them that the panel decision was wrong. That is not going to happen.

Given the long odds for obtaining rehearing, and then reversal, of the panel, the real reasons to seek rehearing are tactical. Sometimes a party thinks it can draw a sharp dissent that can help convince the Supreme Court to hear the case. In this instance, there may be an additional strategic reason to seek rehearing, which is to delay taking the case to the Supreme Court until there is a ninth Justice. If a party thought that there is a better chance of getting four Justices to vote for certiorari, it might want to delay.

Certiorari to the Supreme Court.

Parties seeking Supreme Court review must first convince at least four Justices to grant their petition for certiorari. That does not change even if, as may be the case, Justice Scalia’s seat remains vacant when the case reaches the Court. The Court grants certiorari in only about one per cent of the cases brought to it. In most instances, the Court will only agree to hear cases when there is a split among two or more lower courts on the issue presented. Unless a case is of truly extraordinary magnitude, such as the election of the President in 2000, the mere fact that a case is “important” or involves a lot of money is not enough to justify Supreme Court review.

Because Supreme Court review is so hard to obtain, there is a small, but influential, group of Supreme Court advocates who specialize in finding sometimes obscure cases that might be cited to prove there is a split in the circuits. However, as to reclassification, the main issue in the case, it is going to be almost impossible to discern such a conflict. In addition, the unique history of this case makes the issue on review particularly narrow. In 2005, Supreme Court considered the statute at issue in the reclassification question and determined that the statute is ambiguous so that, under longstanding precedent, the FCC is entitled to deference in its interpretation of the statute. And, as the D.C. Circuit pointed out in 2014 when it rejected the FCC’s earlier attempt to impose network neutrality rules, the FCC also has latitude to revise its interpretation, so long as it gave a reasonably-good explanation of the change. That is what happened here and all three judges on the D.C. Circuit panel found that the FCC’s explanation was satisfactory.

There are, of course, a number of other issues in the case. The only one which might, in some circumstances, appeal to at least some members of the Supreme Court is the First Amendment challenge. However, the fact that the petitioners could not convince even Judge Williams, who is typically very receptive to corporate speech arguments, to accept the First Amendment arguments makes certiorari on this question a longshot. The other issues in the case are routine, if consequential, questions about compliance with procedural requirements, statutory construction, and application of facts to a known statutory framework. None of them are the kind of questions that the Supreme Court generally reviews.

What is the short-term effect of the decision?

Even though rehearing and Supreme Court review could still upend the FCC’s decision -- and Congress can attempt to overcome a near-certain Presidential veto to enact legislation blocking the FCC from enforcing the news rules -- the Court of Appeals decision has given FCC Chairman Tom Wheeler and his two Democratic colleagues a green light to enforce the network neutrality rules and exercise the other powers that come with reclassification. This can have an immediate effect on at least three pending initiatives:

1. Extending the FCC’s Lifeline program to include subsidies for broadband service,
2. Implementing rules to create a retail market for cable set-top boxes, and
3. Adopting rules to protect the privacy rights of broadband customers.

In the latter proceeding, the effect of the reclassification decision was to divest the Federal Trade Commission of any power to regulate the privacy practices of ISPs, so the FCC is under considerable pressure to adopt appropriate rules as quickly as possible.

With respect to the network neutrality rules themselves, it could well be that particular issues will generate consumer complaints. Thus far the only significant dispute that has developed is over various practices relating to “zero rating,” in which carriers exempt certain kinds of data from usage caps that would otherwise apply. The most visible and controversial of these undertakings is T-Mobile’s “Binge On” program that exempts video streaming from data caps. Many consumer advocates argue that this is a violation of the network neutrality rules because it prioritizes particular kinds of data rather than following the general principle that “bits are bits are bits.”

What happens next year?

There will be a new President in January, and a new FCC Chairman shortly thereafter. The presumptive nominees have already staked out positions supporting (Hillary Clinton) and opposing (Donald Trump) network neutrality. A Trump-appointed FCC would presumably stop utilizing Title II powers and refrain from enforcing the network neutrality rules, but a formal recision of the FCC’s decision would take some time and would require some legal gymnastics. There is plenty of time to address that scenario if and when it happens.

1. “I agree with the majority that the Commission’s reclassification of broadband internet as a telecommunications service may not run afoul of any statutory dictate in the Telecommunications Act.”