Review of DC Circuit's Net Neutrality Decision Could Be Hard for Some Justices to Resist

Now that the U.S. Court of Appeals for the D.C. Circuit won't hear en banc review of FCC net neutrality regulation (see 1705010038), focus shifts to the Supreme Court. Conventional wisdom is justices are unlikely to grant cert to hear an appeal, especially since the FCC is pursuing a do-over. Some opponents of the order think conventional wisdom could be wrong. Industry parties that sought en banc D.C. Circuit review didn't comment, including USTelecom, CTIA, AT&T, CenturyLink, NCTA, American Cable Association and Alamo Broadband.

Berin Szoka, president of TechFreedom, said the general assumption may not prove quite right. New Justice Neil Gorsuch, highly skeptical about the broad deference justices have given expert agencies, could shift the balance, Szoka said. Gorsuch has been viewed as a supporter of curbing the level of deference courts give agencies under the 1984 Chevron doctrine (see 1702010028). Gorsuch may view appeal of USTelecom v. FCC as a “perfect test case” on “fundamental issues of the separation of powers,” Szoka said. In 1981, the Reagan administration came into office bent on changing Carter-era rules, while also changing Supreme Court doctrine, Szoka said. Other parts of the administration revised the Carter-era rules, Szoka said. “They mooted the cases that would have allowed them to actually change the way that the courts handled administrative law,” he said. “We’re in a similar moment here."

Opponents of Title II regulation of ISP broadband service would love to see an appeal and subsequent victory, said former FCC Commissioner Robert McDowell, now at Cooley and Mobile Future. "Odds of cert being granted greatly increase when the solicitor general [SG] supports cert,” McDowell emailed. “SG support can overcome a lack of a split in the circuits, as plenty of precedent shows, especially for cases that arise from the D.C. Circuit. While conventional wisdom says that getting cert granted after such an en banc decision is unlikely, it's not unheard of. Then there's the question of whether this will be THE case that the Court takes if it wants to reform the doctrine of Chevron deference, a topic of great speculation during the Gorsuch confirmation process. Again, a tall order, but stranger things have happened.”

Free State Foundation President Randolph May noted D.C. Circuit Judges Brett Kavanaugh and Janice Rogers Brown would have heard the case en banc. Those dissents increase the chances the Supreme Court will hear the case if asked, May said.

“It’s always a roll of the dice, but there are some court-watchers who think this one has a chance,” said Doug Brake, senior telecom policy analyst at the Information Technology and Innovation Foundation. “As made clear in the dissents in yesterday’s order denying a rehearing, this case nicely tees up questions over the reach of Chevron deference. … Gorsuch has expressed a clear displeasure with Chevron, and his vote may tip the scale.”

Long Shot

Other observers see a Supreme Court hearing of a net neutrality appeal as a really long shot.

Gus Hurwitz, co-director of the Space, Cyber and Telecom Law Program at the University of Nebraska College of Law, said it's always safer to bet against the high court granting cert. “This is an issue and a framing that a number of justices would be interested in hearing, and dissents from Judges Brown and Kavanaugh will get the justices' attention, but the change in administration and pending NPRM will give most justices serious pause,” Hurwitz said. “If it does get to the court, it will be because the justices recognize that the 2017 open internet order will also be challenged and that questions about the FCC's basic authority to be enacting orders on these issues will be just as important then as it is now.”

Dissents from en banc denials “are a good way to signal that a case is cert-worthy, and my sense is that both the dissents and the concurring opinion are written with the Supreme Court as their target,” said Daniel Lyons, associate professor at Boston College Law School. “There is almost no chance that the Supreme Court will grant cert on this case because the agency is in the process of revising the rules. The court takes few cases each year and won't waste its time on rules that might soon be invalidated anyway.”

There’s at best a 25 percent chance the Supreme Court will hear the case, Paul Gallant, a Cowen analyst, emailed investors. “The Court can see that the new Republican FCC is likely to reverse Title 2 later this year; and 2) Net neutrality is major national policy, but the actual legal question is less exciting -- did the agency have a reasonable basis to change its earlier policy?” Gallant wrote. “That’s not usually Supreme Court material.”

“Conservatives pursuing a limited government agenda could view this case as a nice vehicle to rein in generous use of the Chevron doctrine to rubber stamp agency mischief,” emailed Paul Glenchur, Hedgeye Potomac Research analyst. "The DC Circuit has essentially told the FCC it can classify broadband however it wants as long as it follows [Administrative Procedure Act] requirements," he said. "It might be best to leave well enough alone from the FCC’s perspective but I expect some parties will want to keep pushing.”

Many Doubts

There are many reasons to doubt the high court will hear the case, said public interest lawyer Andrew Schwartzman. "It takes cases where there is an important constitutional issue or a statutory question as to which there is a conflict among the lower courts," emailed the Georgetown Law Institute for Public Representation senior counselor. "The constitutional issue here is pretty silly; only Judge Kavanaugh, who has a very iconoclastic First Amendment perspective, considered this a worthy argument. Notably, none of the ISPs tried to make that argument. There is no circuit conflict." The high court "doesn’t like messy cases where the issue is not squarely presented," he added. "The separation of powers issues that Judges Kavanaugh and Brown made are the kind of thing a more conservative Supreme Court might want to take up some day, but Judge [Sri] Srinivasan made a powerful argument on why the history of this issue makes it particularly ill-suited for consideration of those questions."

Supreme Court review is "highly unlikely," given the looming new FCC rulemaking, said a former commission official who's now an industry attorney. Another telecom attorney agreed such review is unlikely and said key industry players could be wary of filing Supreme Court appeals that spark a three-front war and complicate their efforts at the FCC and in Congress. The attorney said industry parties "will almost certainly" query FCC officials on their litigation thoughts. "I think [Chairman Ajit] Pai and the [general counsel] may believe a cert petition could actually be unhelpful now," the attorney said: "Why have the matter pending for months before the [Supreme Court], when there is a probability that the Court will deny cert and when the pendency of a cert petition serves as inertia for Congress to act and a reason for" net neutrality supporters to argue the FCC should stop or slow its rulemaking.

Matt Wood, Free Press Policy director, expects the FCC to plow forward on rules no matter what happens at the court. “I don't think Pai and co. will sit and wait for the Supreme Court to hear this case and then throw out the rules next June (13 months from now) because (1) highest Court review is not guaranteed and is in fact unlikely; and (2) there is no reason to think the ISPs win in the Supreme Court,” Wood emailed.

"If conventional wisdom ultimately proves wrong" here, "it would be from ignoring the catnip appeal to at least four Supreme Court Justices, of a USTelecom v. FCC precedent, that effectively presents the new view that the judiciary should grant regulatory agencies near complete Chevron deference when they interpret the bounds of their own authority,” said Scott Cleland, chairman of NetCompetition.

Some litigants "are going to do what they're going to do, regardless," said one industry attorney, suggesting it's likely Alamo, TechFreedom and Daniel Berninger will file cert petitions. The lawyer said one option for industry parties is just to get the Supreme Court to vacate and remand the D.C. Circuit ruling on the grounds the FCC plans to go in a different direction -- "just kind of wipe the slate clean."

Meanwhile, the FCC released a fact sheet Tuesday with quotes from House and Senate Republicans endorsing Pai’s actions on net neutrality, including from House Speaker Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky.