Supreme Court Decision May Impact FCC Rules Now Before Appeals Courts

UPDATE  Inside Towers covered the major Supreme Court ruling that shifted power from the executive branch to the judiciary and stands to transform how the federal government works. The conservative majority overturned the 1984 “Chevron” precedent that required the judiciary to uphold agency statutory interpretations when laws came with unclear commands or had gaps needed filling. With this action, the court has made countless regulations vulnerable to legal challenge, notes CNN. That includes several FCC rulings, experts say.

In the telecom sector, Chevron has been a major reason the FCC is recognized as having the power to regulate — and deregulate — ISPs. Chevron was cited in 2016 when a federal appeals court upheld the Obama-era FCC’s Net Neutrality rules. The U.S. Court for the District of Columbia Circuit applied the Chevron precedent when evaluating whether the FCC decision to regulate broadband as a telecommunications service was permissible under the law, according to Ars Technica.  

Chevron later helped the Trump-era FCC repeal those Net Neutrality rules. One of the three judges deciding the case wrote that then-FCC Chairman Ajit Pai’s justification for reclassifying broadband as an information service “is unhinged from reality.” But Chevron and another precedent caused the court to defer to the FCC’s interpretation.

Chevron is relevant again because the agency voted in April to restore Net Neutrality for ISPs, prohibiting them from blocking or slowing down websites in favor of paid prioritization. Opponents, including FCC Commissioners Brendan Carr and Nathan Simington, said the ruling wasn’t needed because ISPs are not conducting those actions, Inside Towers reported.

The ruling triggered cable and telecom industry lawsuits in an effort to block the rules from going into effect this month. The industries will likely cite Chevron Supreme Court ruling as the suit moves forward, notes Ars Technica.

Another FCC ruling that’s pending in the courts might also be impacted by the Chevron ruling. The agency’s new digital discrimination rules included a “disparate impact” standard that can hold ISPs liable for unintended discrimination in the broadband infrastructure rollout. The FCC’s rules are before the U.S. Court of Appeals for the Eight Circuit in St. Louis, notes Broadband Breakfast. ISPs said the FCC acted based on an incorrect interpretation of federal law. Before the new Supreme Court ruling, Chevron would have required the court to accept the FCC’s rules if found to be reasonable and not arbitrary or capricious.

The types of executive branch moves that the Chevron ruling jeopardizes include an FCC plan to put WiFi on school buses using E-Rate subsidies. The agency plans to vote on this issue later this month. Carr and Simington oppose this move as well, stating that the law doesn’t allow E-Rate funds to be used for this purpose.

Shifting regulatory power from agencies to the courts gives well-resourced companies with multiple lawyers more power to fend off regulations they view as harmful. “Congress rarely gets anything done on tech, so agencies do most of the regulatory work,” Paul Gallant, a policy analyst at the market research firm TD Cowen, told CNN. “But if the court reduces their rulemaking power, it would be particularly helpful in protecting the major tech platforms against new regulations that currently appear likely if Biden is reelected.”

In a lengthy dissent from the 6-3 decision, Justice Elena Kagan said the court discarded precedent — unwisely setting up the Supreme Court and courts in general — as the final arbiter on regulatory matters in which they are not experts. Kagan said that power rightly belongs with federal agencies, reports The Washington Post.

Kagan wrote that Congress intended for agency experts to determine the meaning of unclear regulations involving technical subjects. “Agencies often know things about a statute’s subject matter that courts could not hope to. Agencies are staffed with ‘experts in the field’ who can bring their training and knowledge to bear on open statutory questions.”

Federal agencies have increasingly taken a more active role in crafting policy because of partisan gridlock in Congress, reports The New York Times. Political divisions often have prevented lawmakers from fully attending to the nation’s most intractable problems, creating a void that regulatory agencies have tried to fill, sometimes in ways that draw sharp opposition.

“I’ve sat in the room as legislation has been marked up, and the way legislation gets through many times is to be purposefully imprecise,” said Tom Wheeler, the former Democratic FCC Chairman who faced a legal onslaught by ISPs over his agency’s work during the Obama administration over Net Neutrality.

Wheeler said the regulatory gaps have been especially glaring in technology, since Congress has failed to articulate clear new rules on some of the most cutting-edge issues in the digital age. Without guidance from legislation or deference from the courts, federal agencies may now struggle to respond to new challenges — like the rise of AI — as they find themselves newly unable “to address anything unless the Congress addresses it,” he told the Times.

By Leslie Stimson, Inside Towers Washington Bureau Chief

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