TechFreedom: FCC’s Digital Discrimination Rule Would ‘Cripple’ Broadband Investment

TechFreedom urged the FCC not to use an “obscure provision” on digital discrimination, buried deep in the “enormous” Infrastructure Investment and Jobs Act, to “smuggle onerous common-carrier regulations” onto the internet. TechFreedom’s position was detailed as part of an amicus brief Tuesday (docket 24-1179) in the 8th U.S. Circuit Court of Appeals.

The FCC’s Nov. 20 order “doing just that (and more) erroneously rejects TechFreedom’s position,” said the brief. It supports the 20 industry petitioners that want the order vacated as unlawful (see 2404230032).

The relevant provision in the statute’s Section 60506 directs the FCC to adopt rules to prevent digital discrimination of broadband access based on income level, race, ethnicity, color, religion or national origin, said TechFreedom’s brief. “Everyone agrees that the FCC’s Section 60506 rules should bar deliberately withholding broadband service from an area out of animus against people in one of the protected classes,” it said.

But the FCC “wants to go much further,” said TechFreedom’s brief. In its Nov. 20 order implementing Section 60506, the agency concludes that the provision “targets not only disparate treatment but also disparate impact,” it said. Under the disparate impact standard, “liability can arise even when a disparity between two groups is entirely unintended,” it said.

The FCC “doesn’t stop there,” said TechFreedom’s brief. Its new rule governs not only broadband providers but all entities that otherwise affect consumer access to broadband, it said. “Conceivably this means any entity that happens to provide broadband to its customers, employees, or tenants,” it said. The rule “governs not just the price or quality of broadband service, but installation, customer service, marketing, advertising, and more,” it said.

Under the ordinary standards of statutory construction, Section 60506 doesn’t grant the FCC “the authority it seeks,” said TechFreedom’s brief: “But the FCC’s power grab is not ordinary; the usual standards do not apply.” The order “triggers, but cannot satisfy, the major questions rule,” it said.

The major questions rule ensures that members of Congress “make all the important policy decisions themselves,” said TechFreedom’s brief. Under the rule, a court first determines whether an agency is seeking to resolve a major policy question, it said. If so, the court then determines whether Congress has clearly stated that that question should be resolved by the agency, it said. TechFreedom agrees that the FCC’s digital-discrimination rule tackles a major policy question, it said. But Congress hasn’t “clearly granted the FCC the authority to issue the rule at hand,” it said.

The FCC’s reading of Section 60506 “triggers the major questions rule three times over,” said TechFreedom’s brief. The rule “is a matter of great economic significance,” because it seeks “to transform the broadband industry,” it said. “The FCC seeks to manage rates, mandate buildouts, and micromanage various aspects of broadband service, contracting, and even marketing,” it said. The rule “would cripple private investment in broadband,” it said. Its overall economic impact is “incalculable,” it said.

The rule “is a matter of great political significance,” said TechFreedom’s brief. Broadband regulation has been the subject of intense debate in Congress, at the FCC and beyond, it said. Congress has repeatedly considered and rejected bills related to broadband regulation, it said. That’s a sign “that the FCC is trying to evade the legislative process,” it said.

The rule raises “grave constitutional issues,” TechFreedom’s brief said. Because it lacks the “guardrails” that normally accompany a disparate-impact liability scheme, the rule “could push private entities to adopt racial quotas, in violation of the Equal Protection Clause," it said.

Congress hasn’t granted the FCC “clear authority to enact its sweeping rule,” said TechFreedom’s brief. The rule “defies statutory text and context at every turn,” it said.

The FCC’s reading of Section 60506 “assumes that Congress silently repealed huge chunks of the Communications Act,” the statute that governs the broadband industry, said TechFreedom’s brief. Section 60506 “neither authorizes disparate-impact liability directly nor contains the burden-shifting structure one would expect to accompany such a liability scheme, it said.

Section 60506 “neither invokes” the Communications Act’s enforcement mechanism “nor contains an enforcement mechanism of its own,” said TechFreedom’s brief. Section 60506 “is a few lines of text buried in a thousand-page spending bill,” it said: “If it overhauled the broadband industry, it would be the ultimate elephant in a mousehole.”