Ninth Circuit to Review Repeal of Net Neutrality

Net neutralityThe U.S. Court of Appeals for the Ninth Circuit will hear a challenge to the recent repeal of net neutrality regulations. After the Federal Communications Commission (FCC) successfully fended off challenges to its net neutrality rules during the Obama administration, President Trump appointed a former lawyer for Verizon to head the FCC. Ajit Pai made it his mission to repeal the short-lived rules.

The net neutrality conflict pits powerful telecommunications providers, including AT&T, Comcast, and Verizon, against powerful website owners, including Facebook, Google, and Etsy, as well as relatively powerless consumers. The FCC, along a party-line vote, sided with the telecommunications companies by voting in December to repeal net neutrality. Its repeal order was published on February 22, 2018, but the order has not yet taken effect, pending action by the Office of Management and Budget.

Regulatory agencies rarely take a controversial action that isn’t challenged in court. Just as net neutrality was attacked in court by Verizon and other telecommunications companies, courts will consider whether the FCC’s repeal of the rule is arbitrary or contrary to the evidence before the Commission. States that are challenging the repeal of net neutrality include New York, California, Illinois, Massachusetts, New Jersey and Pennsylvania.

What Is Net Neutrality?

“Net neutrality” requires internet service providers (ISPs) to treat all internet traffic equally, regardless of the identity of the person or business seeking internet access or of the website the user wants to visit. More specifically, net neutrality assures that ISPs do not favor some users or websites over others — by, for example, providing speedy access to websites that the ISP owns while slowing down access to others.

The FCC’s net neutrality rules prohibit broadband providers from doing five things:

  • Blocking the lawful content of a website (known as an “edge provider”) from broadband subscribers.
  • Throttling (deliberately slowing the connection to) any edge provider.
  • Accepting compensation to favor or prioritize some internet traffic over other traffic.
  • Unreasonably interfering with or disadvantaging a user’s ability to choose and access lawful internet content, applications, and services, or the ability of edge providers to make lawful content, applications, and services available to users (the “General Conduct” rule).
  • Failing to disclose network management practices, performance characteristics, and terms and conditions of broadband services to users.

The net neutrality rules were designed to counter fears that ISPs would favor edge providers in which they have an interest or those that pay for prioritized access. Comcast, for instance, might slow traffic to the New York Times in order to increase traffic to its own news website, or it might slow traffic to Bing if Google paid a fee for prioritized access. That might increase the profits of telecommunications companies, but it would harm consumers by limiting easy access to websites that are disfavored by the ISP.

Pai assured the public that his former client and other telecommunications companies have no interest in interfering with their customers’ website access. If that’s true, one wonders why telecommunications companies are so fiercely opposed to net neutrality. Pai claims that abandoning net neutrality will “set the internet free,” but giving ISPs the ability to restrict consumer access to websites is an odd view of freedom.

While some have argued that prioritized access boosts quality of content, quality is subjective. Some internet users will prefer content that others will regard as devoid of quality. True freedom means choosing content based on personal preference, not on an ISP’s decision to favor some websites over others. That may be why internet users and websites owners, as opposed to large telecommunications companies, overwhelmingly favor net neutrality.

Challenges to Repeal of Net Neutrality

States and their public service commissions, website owners, and public interest groups all filed lawsuits challenging the FCC’s repeal of net neutrality. The suits were consolidated by the U.S. Judicial Panel on Multidistrict Litigation, which randomly assigned them to the U.S. Court of Appeals for the Ninth Circuit.

Administrative rules can be overturned if the agency acted arbitrarily when it enacted the rule, if it failed to follow required rule-making procedures, or if the rule is not supported by substantial evidence. Courts are generally required to be deferential to an agency’s rule-making power, and will not substitute their view of the evidence in support of a rule for a reasonable view that the agency might have taken.

Challenges to administrative rules are not usually successful if the agency had authority to make the rule and if it followed necessary procedures. In this case, the FCC repealed a rule that had only recently been enacted, which might suggest that the agency’s action was based on the arbitrary whims of new leadership rather than a careful review of the evidence. After all, the evidence that the FCC relied upon when it enacted net neutrality hasn’t changed. Nor is it reasonable to believe that in the short time the rule has been in existence, experience has shown it to be unworkable or harmful. In fact, Pai announced his intent to repeal the rule well before the FCC considered any new evidence at all. Only the political composition of the FCC’s decision-makers has changed, not the evidence that persuaded the FCC to implement the rule during the previous presidential administration.

While challenges to the repeal of an administrative rule must overcome daunting obstacles, they do sometimes prevail. For example, bowing to pressure exerted by the auto industry, the Reagan administration repealed a rule enacted by the National Highway Traffic and Safety Administration that required passive restraints in automobiles. The insurance industry challenged the repeal as arbitrary and capricious. The Supreme Court agreed that the agency failed to demonstrate that it fairly considered the evidence when it repealed the rule.

A similar strategy might persuade the Ninth Circuit that the FCC is arbitrarily repealing a well-considered rule simply because the new administration has decided to elevate the interests of the telecommunications industry above those of consumers, regardless of the evidence. The discovery that millions of public comments in support of the rule were posted using false identities (including half a million that came from Russian email addresses) might also be useful evidence that the FCC did not base its repeal on a fair analysis of the record.

Net neutrality could also be enacted legislatively, but that seems unlikely to happen in the near future. Even if Democrats gain control of the House of Representatives in midterm elections and either gain control or find enough votes in the Senate to change the law, President Trump would likely veto the change. More than half of the states are considering their own net neutrality legislation, but the ability of states to legislate in an area that might be preempted by federal regulation of interstate communications remains untested.

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