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Summary

“Federal administrative agencies are required to engage in “reasoned decisionmaking” based on a thorough review and accurate characterization of the record. Their analysis must be based on facts and reasoned predictions; it must be rooted in sound economic reasoning; it must be logically coherent; it must not entail subterfuge or misleading statements. On even these most basic grounds the 2015 OIO falls short.

The entire open Internet rulemaking enterprise is an exercise in post hoc rationalization — the formulation of policy, not statutory interpretation. Net neutrality was determined by certain activists to be “necessary;” proponents were unable to get it from Congress; the FCC was willing; and it tried at least three times to cobble together some statutory basis to justify its preference for open Internet rules, as opposed to determining that such rules were necessary to enforcing a particular statutory provision.

The post hoc/ultra vires problem with the 2015 OIO is disturbingly similar to the one at issue in State Farm, which sets the standard by which the sufficiency of the Commission’s analysis is judged. In that case, the Court held that an agency’s (NHTSA’s) decisionmaking did not follow from the anal- ysis it undertook, nor the statutory purpose it purported to further. The same is true here. If deployment really were the aim of the 2015 OIO, the FCC could have directly encouraged it through any number of more direct (and almost certainly more effective) means. Instead, the Commission concocted a regulatory Rube Goldberg apparatus to do so only, at best, indirectly — and in a way that happened also to further a different, arguably ultra vires objective. Perhaps most tellingly, the

Commission was forced to undertake a series of actions, superficially independent of the 2015 OIO, in order to engineer several of the factual predicates necessary to enable it to justify its rule under the statute. An agency properly acting within the scope of its au- thority would not have to work so hard to fit the round peg of its chosen policy into the square hole of its statute.”

It’s fitting that FCC Chairman Ajit Pai recently compared his predecessor’s jettisoning of the FCC’s light touch framework for Internet access regulation without hard evidence to the Oklahoma City Thunder’s James Harden trade. That infamous deal broke up a young nucleus of three of the best players in the NBA in 2012 because keeping all three might someday create salary cap concerns. What few saw coming was a new TV deal in 2015 that sent the salary cap soaring.

Read the full piece here.

At an oversight hearing on Wednesday, the Senate Commerce Committee confronted Federal Communications Commission Chairman Pai with questions over last week’s partial stay of the commission’s broadband privacy order. While privacy rules are certainly highly complicated, comments from some senators telegraphed a fundamental misunderstanding of what has been done to date to protect consumers, and given the current ecosystem, what the FCC’s proper role should be going forward.

Read the full piece here.

Over the weekend, Sen. Al Franken and Federal Communications Commission Commissioner Mignon Clyburn issued an impassioned statement calling for the FCC to thwart the use of mandatory arbitration clauses in internet service providers’ consumer service agreements — starting with a ban on mandatory arbitration of privacy claims in the chairman’s proposed privacy rules. Unfortunately, their call to arms rests upon a number of inaccurate or weak claims. Before the commissioners vote on the proposed privacy rules later this week, they should carefully consider whether consumers would actually be served by such a ban.

Read the full piece here.

Next week the FCC is slated to vote on the second iteration of Chairman Wheeler’s proposed broadband privacy rules. Of course, as has become all too common, none of us outside the Commission has actually seen the proposal. But earlier this month Chairman Wheeler released a Fact Sheet that suggests some of the ways it would update the rules he initially proposed.

According to the Fact Sheet, the new proposed rules are…

Read the full piece here. 

Summary

“Dear Ms. Dortch:

I write to express my concerns regarding the consumer welfare effects of the revised broadband privacy proposal summarized in a Fact Sheet by Federal Communications Commission (“FCC”) Chairman Tom Wheeler earlier this month. While the Fact Sheet appears to indicate that the Chairman’s revised proposal includes some welcome changes from the initial broadband privacy NPRM adopted by the Commission this Spring, it also raises a number of problematic issues that merit the Commission’s attention before final rules are
adopted.

While the Fact Sheet asserts that the Chairman’s new proposal is “in harmony” with the privacy framework outlined by the Federal Trade Commission (“FTC”) (as well as the Administration’s proposed Consumer Privacy Bill of Rights), the purported changes in this regard are merely rhetorical, and do not, in fact, amount to a substantive alignment of the
Chairman’s proposed approach with that of the FTC.

• First, unlike the FTC’s framework, the proposal described by the Fact Sheet ignores the crucial role of “context” in determining the appropriate level of consumer choice before affected companies may use consumer data, instead taking a rigid approach that would stifle innovation and harm consumers.
• Second, the Fact Sheet significantly expands the scope of information that would be considered “sensitive” well beyond that contemplated by the FTC, imposing onerous and unnecessary consumer consent obligations that would deter welfare-enhancing uses of data.

I agree with the Chairman that, if adopted, the FCC’s rule should align with the FTC’s. But the proposed rule reflected in the Fact Sheet does not. I urge the Commission to ensure that these important deviations from the FTC’s framework are addressed before moving forward with adopting any broadband privacy rules…”

The FCC’s blind, headlong drive to “unlock” the set-top box market is disconnected from both legal and market realities. Legally speaking, and as we’ve noted on this blog many times over the past few months (see here, here and here), the set-top box proposal is nothing short of an assault on contracts, property rights, and the basic freedom of consumers to shape their own video experience.

Read the full piece here. 

Copyright law, ever a sore point in some quarters, has found a new field of battle in the FCC’s recent set-top box proposal. At the request of members of Congress, the Copyright Office recently wrote a rather thorough letter outlining its view of the FCC’s proposal on rightsholders.

Read the full piece here.

Last week the International Center for Law & Economics and I filed an amicus brief in the DC Circuit in support of en banc review of the court’s decision to uphold the FCC’s 2015 Open Internet Order.

In our previous amicus brief before the panel that initially reviewed the OIO, we argued, among other things, that…

Read the full piece here.