Recent Supreme Court Opinions Affecting the FCC’s Digital-Discrimination Rules
TL;DR
Background: The Federal Communications Commission (FCC) issued rules late last year to prevent “digital discrimination” in broadband access. But the rules currently face legal challenges, and several decisions handed down in the U.S. Supreme Court’s most recent term may affect how these challenges play out.
2021’s Infrastructure Investment and Jobs Act (IIJA) required the FCC to issue rules prohibiting discrimination based on factors like income, race, and ethnicity. The resulting rules are broad, covering broadband deployment, pricing, internet speeds, marketing, and more. The 8th U.S. Circuit Court of Appeals will hear challenges to these rules later this month.
But… The FCC claims that the IIJA gave it expansive power to prevent and eliminate discrimination across all aspects of broadband access, and that its rules are needed to address both intentional discrimination and practices that have discriminatory effects, even if unintentional.
However… Critics contend that the commission has overstepped its authority, that its rules will hinder broadband deployment and adoption, and that they will stifle innovative business models. This puts the rules at odds with the IIJA’s stated goal of fostering greater broadband access and adoption.
KEY TAKEAWAYS
THE LOPER BRIGHT DECISION
The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo overturned the longstanding principle of “Chevron deference,” which previously gave agencies like the FCC significant leeway in interpreting ambiguous statutes. Under the new precedent, courts must use their own independent judgment to determine if an agency has acted within its statutory authority, rather than deferring to the agency’s interpretation.
This could make it harder for the FCC to justify its broad interpretation of the IIJA’s mandate. The FCC’s rules go beyond merely preventing intentional discrimination in broadband deployment, extending to practices that might have unintended discriminatory effects across various aspects of broadband service.
Without Chevron deference, the court will need to be convinced that this broad interpretation aligns with congressional intent in writing the IIJA.
THE FISCHER DECISION
The Court’s holding in Fischer v. United States emphasized the importance of reading statutory provisions in context. The FCC’s expansive interpretation of its authority under the IIJA may not align with Fischer’s principle that, when interpreting a law, all parts of the statute should be considered together, not in isolation.
When read as a whole, the IIJA appears to be focused primarily on deployment discrimination by broadband providers. The FCC’s decision to extend its rules to cover pricing, marketing, and other practices by a wide range of entities might be seen as overreaching the authority granted by the law.
THE JARKESY DECISION
SEC v. Jarkesy established that defendants have a right to a jury trial in an Article III court when facing civil monetary penalties for alleged wrongdoing. This decision could have significant consequences for the FCC’s planned enforcement process for digital discrimination.
The current FCC process positions the commission as both prosecutor and judge in potential discrimination cases. The agency would determine if a violation occurred, whether the entity had a valid justification, and what penalties to impose, including “monetary forfeitures.”
Under Jarkesy, this process will likely need to be revised to include a jury trial in federal court, at least in cases where the FCC seeks to impose monetary penalties.
THE OHIO v EPA DECISION
Ohio v. EPA reinforced the principle that agency actions must be “reasonable and reasonably explained.” Agencies must offer a satisfactory explanation for their actions, including a rational connection between the facts found and the choices made.
The FCC may face challenges on this front. Critics contend that the commission’s rules will discourage broadband investment and adoption, contrary to the IIJA’s goals of expanding broadband access.
If the court finds that the FCC hasn’t adequately addressed these potential negative consequences, it could rule that the agency’s action was arbitrary and capricious.
THE CORNER POST DECISION
Corner Post Inc. v. Federal Reserve clarified that the statute of limitations for challenging agency actions doesn’t begin until an entity is directly affected by the action. This could have far-reaching implications for the FCC’s digital-discrimination rules.
Given the broad and somewhat vague definition of entities, policies, and practices that the rules cover, some organizations might not realize they’re subject to the regulations until the FCC takes action against them. Corner Post would allow these entities to challenge the rules at that point, even if it’s years after the rules were initially adopted.
For more on this issue, see “ICLE Ex Parte on Digital Discrimination“ and “Brief of ICLE and ITIF to 8th Circuit in Minnesota Telecom Alliance v FCC.”