Latta Seeks to Ward Off 9th Circuit Concerns Amid ISP Privacy Jurisdiction Debate

A House Republican wants to modify FTC authority to revert to the status that existed prior to a 9th U.S. Circuit Court of Appeals' ruling on trade commission authority over ISPs. Observers told us such a legislative maneuver could be a key element of a broader strategy involving the FCC 2015 net neutrality order. Capitol Hill Democrats and public interest advocates argued in recent weeks that the 9th Circuit ruling would hamstring FTC authority over ISPs if the Communications Act Title II reclassification of broadband is overturned and authority over privacy handed from the FCC back to the FTC. Some congressional Republicans and FCC Chairman Ajit Pai say they want such a privacy handoff to the FTC.

“We’ve got to get [the 9th Circuit issue] resolved,” House Digital Commerce and Consumer Protection Subcommittee Chairman Bob Latta, R-Ohio, said in an interview. “We want to delineate who has what jurisdiction. We think the bill is simple, it’s straightforward. … We’re looking forward to working on it, get it moving. This is [legislation] that would help get this issue resolved.”

Latta spoke about HR-1754 on the floor during Tuesday’s debate about the Congressional Review Act resolution of disapproval to kill FCC ISP privacy rules (see 1703280076 and 1703310066). Both chambers passed that CRA override in largely party-line votes and the White House has said President Donald Trump will sign it. Latta, whose subcommittee takes the lead on FTC matters, is a longtime opponent of Title II’s use on broadband, and undoing Title II would revert privacy back to the FTC, where the 9th Circuit ruling may have left its authority scrambled. Sens. Brian Schatz, D-Hawaii, and Richard Blumenthal, D-Conn., objected to GOP strategies to return jurisdiction to the FTC for that reason, as has House Commerce Committee ranking member Frank Pallone, D-N.J. The FCC still would oversee ISP privacy after enactment of the CRA, with enforcement authority under Communications Act Section 222 absent rules. Latta’s bill has one co-sponsor: Rep. Pete Olson, R-Texas. It has a primary referral to the Commerce Committee, giving Latta authority in advancing his measure. The secondary referral is to the Judiciary Committee, and a panel aide referred us to Commerce.

“We’re optimistic that Rep. Latta’s bill could draw bipartisan support and are working to ensure folks understand the premise of the bill,” said a Commerce Committee spokeswoman. The brief text shows the bill wouldn't repeal the FTC common-carrier exemption but instead makes clear its jurisdiction. The 9th Circuit ruling "creates a gap" leaving “portions of the internet ecosystem" outside FTC authority, Latta said earlier last week on the floor.

Next Steps

A House Democratic staffer questioned whether Latta’s bill would solve what Democrats consider bigger privacy concerns. The bill may be a half-measure, the staffer said, noting it wouldn't leave the FTC notably strengthened and citing its lack of rulemaking authority.

House Communications Subcommittee Chairman Marsha Blackburn, R-Tenn., anticipates “a little bit more to say” about privacy this week, she told us after House passage of the CRA resolution when asked about any further necessary legislative steps. She wrote the House version of the CRA disapproval. “We were just so pleased” about passage of the CRA preventing “the implementation of those rules,” Blackburn said. “It was the right step, and I think it’s important for people to realize nothing changed from a week ago, yesterday, today, tomorrow, on how privacy is regulated. We just kept another layer from being put in place. Now Congress has its Article 1 authority to go back and we’ll make a determination of what to do next. I do hope that we will get bipartisan agreement as we seek to address data security and privacy in this Congress.”

Latta was among many lawmakers who met with Pai last week (see 1703280023). “We didn’t talk about that issue,” Latta told us of a possible FCC Title II rollback, which would affect ISP privacy jurisdiction. “We’re anticipating there’ll be a lot more things that can be resolved by the FCC so we’ll just follow a little bit to see where they’re going to go before we can roll forward with legislation in certain areas because they can do certain things and get it done.” Senate Commerce Committee Chairman John Thune, R-S.D., told us last month he expects the FCC to undo Title II classification for broadband, thereby moving ISP privacy to FTC jurisdiction (see 1703230070).

“We have consistently supported efforts to create a unified policy framework for privacy, and support it being returned to the FTC’s purview,” NCTA said Friday. “In this way, big data collectors -- like Google and Facebook -- will be under the same regime with ISPs and others, and consumers would enjoy a simple, common set of privacy protections.”

'Logical Move'?

Latta’s bill could garner “support from the majority of Republicans” and is the “logical move for opponents of the [FCC] broadband privacy rules” since the measure “deflects one of the criticisms” of moving ISP privacy back to the FTC, Consumer Federation of America Director-Consumer Protection and Privacy Susan Grant told us. “It’s not a bad thing to try to resolve that [9th Circuit] issue by eliminating that restriction, but it doesn’t get to the heart of the problem.” The FTC lacks rulemaking authority so, for instance, it cannot require companies to take reasonable security measures and notify customers of breaches, as FCC rules can do, she said. Acting FTC Chairman Maureen Ohlhausen seems to have a “more restrictive view of privacy,” and that combined with the commission’s statutory limits creates concern, Grant said, citing the public interest role of the FCC. It’s “all well and fine” to clarify FTC authority to allow pursuit of companies that violate privacy practices but it doesn't resolve the issue of what should be fair practices for all, she said.

Many expect the 9th Circuit ruling to be overturned, whether by courts or Congress, one media industry official said.

“The 9th Circuit case is a problematic decision that needs to be remedied in some way,” said Public Knowledge Policy Fellow Dallas Harris, calling Latta “correct” in arguing “that this decision creates a huge regulatory gap" for "ISPs who are primarily common carriers, like AT&T and Verizon. It appears Rep. Latta’s bill would bring the FTCs jurisdiction back to what it was before the 9th Circuit case.” The measure is “forward looking” beyond an undoing of Title II and “plugs a gap that would still remain after ISPs are reclassified as information services,” she said.

Latta’s bill “is certainly narrow enough to be uncontroversial and would do the trick,” said Information Technology and Innovation Foundation senior analyst Doug Brake. He suspects there’s a good chance the 9th Circuit will reverse that ruling en banc and sees Supreme Court review as possible in a circuit split. Activists are “using it as a boogeyman to attempt to scare policymakers toward the flawed FCC privacy framework,” Brake said. “Privacy activists are trying to make this case the tail that wags the privacy policy dog, arguing that it means broadband privacy should be left with the FCC -- this is wrong.” He sees the ruling as potentially affecting FTC authority as is: “The cold logic in the AT&T Mobility case, if applied to the extreme, would indeed be a significant limitation on FTC jurisdiction over common carriers.”

“Congressman Latta is playing a shell game,” emailed New America Open Technology Institute Policy Counsel Josh Stager. “He says the FTC should be the only agency protecting online privacy. On the other hand, he recently voted for H.R. 5510, the so-called ‘Disrupt FTC’ legislation. This bill is a frontal assault on the FTC and its legal authority. He's trying to shift privacy oversight to an agency he's simultaneously trying to hobble. It's a bait and switch.”