FCC Files Brief with DC Circuit in Challenge to BIAS Rules

September 10, 2012. The Federal Communications Commission (FCC) filed its brief [121 pages in PDF] with the U.S. Court of Appeals (DCCir) in Verizon v. FCC, the challenge to the FCC's 2010 rules that regulate the business practices of broadband internet access service (BIAS) providers. These rules are also sometimes referred to as open internet rules or network neutrality rules.

Unfortunately for the FCC and DOJ lawyers briefing and arguing this case, the task of the Court of Appeals is not to determine whether its BIAS regulation would make sound legislative policy. That is a determination for the Congress, and one which the Congress has not yet made. Rather, the question before the Court of Appeals is whether the FCC has statutory authority to write these rules.

This brief grasps for legal authority to write these rules in various statutory sections, but places the most emphasis on Section 706.

This brief squirms to get out from under the weight of this same Court's 2010 opinion in the Comcast case, in which this Court held that the FCC cannot do by adjudication what it now seeks to do by rules. The FCC now argues that this case is different, because since the Comcast case was decided the FCC has produced new and different Section 706 reports.

The FCC promulgated its BIAS rules in its huge Report and Order (R&O) [194 pages in PDF] of late December, 2010. The FCC adopted the R&O on December 21, 2010, and released the text on December 23, 2010. It is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52. See also, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

The FCC has waged an effective campaign of delay. Hence, nearly two years after adopting rules, the Court of Appeals is still only at the briefing stage. The Court has not yet set the date for oral argument.

The FCC adopted its Comcast order on August 1, 2008. The Court of Appeals heard oral arguments on January 8, 2010, and vacated the order on April 6, 2010. In the present case, the FCC adopted its BIAS rules on December 21, 2010. The Court of Appeals could hear oral argument early next year, and issue its opinion by late Spring or Summer of 2013.

The FCC's order adopting the BIAS rules is vulnerable to challenge on the grounds that the FCC lacks statutory authority to adopt these rules. The FCC's argument that it possesses authority is weak, due to the absence of language in the Communications Act giving the FCC authority to regulate BIAS providers, and the April 6, 2010, opinion [36 pages in PDF] of the U.S. Court of Appeals (DCCir) in Comcast v. FCC. See, story titled "Court of Appeals Vacates FCC's Comcast Order", and related stories, in TLJ Daily E-Mail Alert No. 2,072, April 7, 2010.

The FCC wrote in its just filed brief that "this Court found that the Comcast administrative enforcement order had failed to tie the agency’s authority to a specific statutory grant of power."

The FCC continued that "The Court recognized that Section 706 of the 1996 Act could ``be read to delegate regulatory authority,´´ but the Commission itself in ``an earlier, still-binding order´´ had interpreted the statute otherwise and ``remains bound by its earlier conclusion.´´"

"Congress assigned the FCC", the FCC brief argues, "a central role in protecting Internet openness and the resulting investment in broadband facilities."

Actually, the Comcast opinion states the Section 706 "could at least arguably be read to delegate regulatory authority to the Commission". But, the Court wrote in Comcast, "the Commission remains bound by its earlier conclusion that section 706 grants no regulatory authority". The FCC has since reversed its conclusion. However, the Court did not write in its Comcast opinion that if the FCC were to reverse its conclusion regarding Section 706, then Section 706 would confer a stand alone delegation of regulatory authority.

Section 706 of the Telecommunications Act of 1996, which is codified at 47 U.S.C. § 157 notes, provides, in part, that the FCC shall regularly "initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) ... In the inquiry, the Commission shall determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. If the Commission's determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market." (Parentheses in original.)

The FCC adopted its latest Section 706 report [181 pages in PDF] on August 21, 2012. See, story titled "Divided FCC Adopts Section 706 Report" in TLJ Daily E-Mail Alert No. 2,433, August 21, 2012. This report is FCC 12-90 in GN Docket No. 11-121.

The FCC's adopted and released its previous Section 706 report [99 pages in PDF] on May 20, 2011. It is FCC 11-78 in GN Docket No. 10-159. See also, story titled "FCC Releases 7th Section 706 Report" in TLJ Daily E-Mail Alert No. 2,246, May 27, 2011.

Before that, the FCC released a Section 706 report [79 pages in PDF] on July 20, 2010. It is FCC 10-129 in GN Docket No. 09-137. See also, "FCC Releases 6th Section 706 Report" in TLJ Daily E-Mail Alert No. 2,114, July 29, 2010.

The FCC now argues that its Section 706 conclusions command adoption of its BIAS rules. Whether the Court of Appeals will understand that FCC Chairman Julius Genachowski's (at left) desire to promulgate and defend his BIAS rules commanded the factual findings and legal conclusions of these latest Section 706 reports is another matter.

The FCC's just filed brief argues that "Verizon's attack on the Open Internet Rules rests on two fundamental -- and fundamentally flawed -- premises. Verizon first characterizes the Commission as having ``conjured a role´´ and ``inserted itself´´ into broadband."

"But that description cannot be squared with multiple indications to the contrary: the FCC’s congressionally assigned role in communications, the history of oversight of computer-based services, the agency's discretion, confirmed by the Supreme Court, to classify broadband as an information or telecommunications service, the specific commands of Section 706, the Commission’s established authority to issue and modify spectrum licenses in the public interest, and the Commission’s longstanding authority to craft policy for information services to further its numerous other functions."

The FCC continues that "Verizon's second flawed premise is that the Open Internet Rules are a solution in search of a problem and serve no policy purpose. In fact, the record before the Commission showed multiple incidents of broadband providers interfering with their customers’ ability to use Internet services, from file sharing services to Internet-based telephony. The Commission also identified a trio of powerful economic incentives, amplified by increasing technological capability and limited competition among broadband providers, to discriminate among edge providers and to block customer access to Internet sites of their choosing. That record itself justifies Commission action, but the law does not demand the Commission to wait until harm has already occurred."

The FCC argues that its BIAS rules are a reasonable exercise of the FCC's discretion under Section 706, which the FCC argues grants "direct authority to set policy for broadband Internet access service".

The 2010 BIAS rules also apply a lighter regulatory regime for wireless broadband access. Hence, the FCC's brief argues that the FCC's "plenary authority over spectrum licenses under Title III of the Communications Act separately authorizes the mobile broadband rules".

The FCC also argues that "Section 201(b) of the Act gives the Commission power to ensure that telephone rates are just and reasonable. Rules that protect Internet-based telephone service from being blocked serve that mandate by preserving competition in the telephone market. Section 628 of the Act gives the Commission authority to protect competition in video distribution."

Verizon also argued that the BIAS rules violate its First Amendment free speech rights because they "limit broadband providers’ own speech and compel carriage of others’ speech".

The FCC brief argues that Verizon is not a speaker, but a conduit, in this case.

Verizon filed its brief on July 2, 2012. Its counsel of record is Helgi Walker (Wiley Rein). She was also counsel to Comcast in its successful challenge.