FCC Files Petition for Rehearing En Banc in Brand X Case

December 3, 2003. The Federal Communications Commission (FCC) filed a Petition for Rehearing En Banc [19 pages in PDF] with the U.S. Court of Appeals (9thCir) in Brand X Internet Services v. FCC.

On October 6, 2003 a three judge panel of the Court of Appeals issued its opinion [39 pages in PDF] vacating the FCC's declaratory ruling that cable modem service is an information service, and that there is no separate offering as a telecommunications service. The FCC adopted this Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF] at its March 14, 2002 meeting. This is FCC 02-77 in Docket No. 00-185 and Docket No. 02-52.

This opinion (which is also published at 345 F.3d 1120) presents an obstacle to the FCC in pursuing policies that promote broadband deployment, and development of services, such as voice over internet protocol, that depend on broadband access.

See also, story titled "9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information Service Without a Separate Offering of a Telecommunications Service" in TLJ Daily E-Mail Alert No. 754, October 7, 2003, and story titled "Reaction to 9th Circuit Opinion in Brand X Internet Services v. FCC" in TLJ Daily E-Mail Alert No. 756, October 9, 2003.

The FCC petition argues that the three judge panel erred by not applying Chevron deference. It wrote that "When courts review legal challenges to an agency’s interpretation of its authorizing statute, they must use the two-part test adopted by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). In this case, however, the panel did not apply the Chevron test to the FCC’s statutory construction. Instead, the panel held that it was bound to accept the statutory interpretation that another panel of this Court had previously adopted in AT&T Corp. v. City of Portland, 216 F.3d 871 (9th Cir. 2000) ... The FCC’s statutory interpretation in this case never received the sort of judicial review to which it is entitled under the Supreme Court’s Chevron doctrine."

The FCC argues that "The Court should grant rehearing en banc so that it can apply the correct standard of review -- the Chevron test -- to decide the issue at the heart of this case, an issue that the panel left unresolved: whether the FCC reasonably construed the Communications Act when it ruled that cable modem service (as currently provided) is solely an information service. Once the Court applies the Chevron test, it will find that all of petitioners' attacks on the Order lack merit. Because the Act does not clearly address the issue of how to classify cable modem service, and because the FCC resolved that issue by reasonably interpreting ambiguous statutory terms, the Court should deny all of the petitions for review and affirm the Order in all respects." (Parentheses in original.)

The FCC petition does not address in detail the policy consequences of this case. It does state, however, that "Given the momentous issues involved here, it is essential that this Court apply Chevron. At stake in this case is the future evolution of broadband services that promise to fuel economic growth and technological innovation in this country for years to come."