Industry Groups Hit 'Unprecedented' FCC Discrimination Rules at 8th Circuit

The FCC's digital discrimination rules "pile overreach on overreach," said attorney Morgan Ratner on behalf of the Minnesota Telecom Alliance (MTA) and other industry groups challenging the commission's rules Wednesday during oral argument in the 8th U.S. Circuit Appeals Court (see 2407300048). The rules are based on an "unprecedented disparate impact scheme that is in many ways the broadest the federal government has ever seen," the lawyer added. None of the FCC's decisions in its order is based on a "plausible understanding" of Congress' intention.

"This is an ordinary nondiscrimination provision attached to $65 billion of federal funding," Ratner said: "It is not an unprecedented grant of authority for the agency to adopt the broadest Civil Rights program we've ever seen." When Judge Steven Grasz asked for a response to claims that a rule covering only disparate treatment would "in effect do nothing," Ratner said that in "rare circumstances" where the U.S. Supreme Court allowed disparate impact, it "emphasized that this is an extreme remedy" and suggested "how aberrational it would be to have a disparate impact scheme" without history of disparate treatment. The FCC's disparate impact provision is "construed to be the single broadest disparate impact provision we've ever seen because of the inclusion of income level."

When asked whether MTA believed the entire rule should be set aside or if only certain parts should be struck, Ratner said there are "independent bases for rejecting the rule according to the language of the statute," such as the absence of a severability provision, but it could be set aside as a whole based on the disparate impact provision.

FCC Deputy General Counsel Jacob Lewis defended the rules, saying it was the "best reading" of the Infrastructure Investment and Jobs Act and gave "no deference to the commission at all." Lewis said that Congress' directive to consider technical and economic feasibility in the commission's rules indicated the need to adopt a disparate impact framework. "This statute is written without reference to a particular actor whose intent could be measured," Lewis said, and "if this statute were limited to intentional discrimination, it would not do much of anything." Ratner disagreed, saying the statute "does not say the commission gets to define discrimination" but "just gives it rulemaking authority."

Claims that the rules will "upset business practices" ignore the commission's analysis that it's obligated to consider technical and economic feasibility when a digital discrimination claim is made, Lewis said. The rules also can't apply to the major questions doctrine, Lewis argued. "This is a new statute" and Congress "gave the commission a significant task here," Lewis said: "The major questions doctrine doesn't apply to the commission's contemporaneous or new interpretation of a statute that it had just got handed."

The "question here is whether this language is looking at results or the mindset of actors," said attorney David Brody of the Lawyers' Committee for Civil Rights Under Law. "Nothing anywhere in the four corners of the text of this statute talks about specific actors or their intent." Congress gave broadband providers the ability to defend against discrimination claims under a disparate impact framework with its inclusion of technical and economic feasibility in the statute, Brody said. Technical and economic feasibility "just wouldn't make sense in the disparate treatment context."

Lawyers' Committee attorney Marc Epstein raised issue with the FCC's decision not to provide individuals with the right to file formal complaints if they believed they were a victim of digital discrimination. Epstein argued the FCC didn't provide an adequate reason for the decision and violated the Administrative Procedures Act.