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IAPP, reporting on the likelihood of reversing the FCC’s repeal of Net Neutrality, quoted ICLE Executive Director Geoffrey Manne:

But Geoffrey Manne, executive director at the International Center for Law and Economics, doesn’t see the regulatory scheme, as it technically exists now, as problematic. He thinks the FTC has plenty to go on. Largely because, even if the 9th Circuit court’s initial ruling were to stand, and common carriers were designated based on status and not activity, the ruling technically only applies to companies headquartered in the 9th Circuit. Plus, suing a company in court is only one of the FTC’s enforcement options.

“The FTC has lots of mechanisms for getting around [the ruling], not the least of which being administrative adjudication,” Manne said. “I think far more likely is that it would have very limited effect beyond the 9th Circuit.”

Alternatively, Manne said, what if the FTC simply decided it didn’t agree with the FCC’s terms? Who gets to decide who a common carrier is? “In the world in which Title II still applied,” he said, “we all act as if regulation by the FCC under Title II equals common carrier status under the FTC Act, but I don’t know that’s necessarily the case.”

Read the full article.

Bloomberg Technology, reporting on a push by California and New York to create their own Net Neutrality rules in 2018, quoted ICLE Executive Director Geoffrey Manne:

“California has a long and questionable history of passing laws and regulations that end up applying to the whole country, because companies don’t want to or can’t change their products to sell them just in California,” said Geoffrey Manne, executive director of the International Center for Law & Economics, a research group. If California, Washington and New York all passed similar guidelines, it could carry a significant amount of weight.

The internet doesn’t lend itself cleanly to state lines. It could be difficult for Comcast or Verizon to accept money from services seeking preferential treatment in one state, then make sure that its network didn’t reflect those relationships in places where state lawmakers forbade them, Manne said. Republican FCC Commissioner Michael O’Rielly raised this point at the December meeting when the rules were passed, saying the preemption provision in the rules protected internet providers against such a messy situation.

Geoffrey Manne was quoted in Bloomberg Technology on the effects that California laws have on the rest of the country:

Even supporters of state legislation on net neutrality think this may go too far. California State Senator Scott Wiener introduced a bill this week that would only apply to behavior within the state, saying any other approach would be too vulnerable to legal challenge. “We’re expecting that there will be litigation,” he said. Wiener said that the internet providers who backed Pai’s plan shouldn’t flinch at his bill. “They say that, as a matter of internal policy, they adhere to net neutrality.”

But this wouldn’t be the first time a large state threw around its weight in ways that reverberate beyond its borders. The texbook industry, for instance, has long accommodated the standards of California and Texas. Just last month, more than a dozen states asked the Supreme Court to block a California law that required egg sellers to abide to certain guidelines in their treatment of hens, arguing it attempts to regulate industry in other states.

“California has a long and questionable history of passing laws and regulations that end up applying to the whole country, because companies don’t want to or can’t change their products to sell them just in California,” said Geoffrey Manne, executive director of the International Center for Law & Economics, a research group. If California, Washington and New York all passed similar guidelines, it could carry a significant amount of weight.

Click to read the Bloomberg Technology article here. 

The Federal Communications Commission (FCC) will soon vote on whether to repeal an Obama-era rule classifying Internet Service Providers (ISPs) as “common carriers.” That rule was put in place to achieve net neutrality, an attractive-sounding goal that many Americans—millennials especially—reflexively support.

Read the full piece here.

This week the FCC will vote on Chairman Ajit Pai’s Restoring Internet Freedom Order. Once implemented, the Order will rescind the 2015 Open Internet Order and return antitrust and consumer protection enforcement to primacy in Internet access regulation in the U.S.

Read the full piece here.

In response to the Federal Communication Commission’s (FCC) proposal to rescind its so-called “net neutrality” rules, U.S. Sen. Cory Booker tweeted that the FCC is “giving corporations power over the once neutral internet.”

Booker and his social media allies think the new rules will destroy the internet as we know it. Except, they won’t.

Read the full piece here.

 

The following may be attributed to Geoffrey Manne, Executive Director, ICLE

Today, Federal Communications Commission Chairman Ajit Pai announced the restoration of the Commission’s historically light-touch, pro-innovation approach to regulating broadband Internet access services. The full text of the Restoring Internet Freedom Order will be available to the public here tomorrow.

Chairman Pai’s proposed Order rescinds the misguided 2015 Open Internet Order and reasserts the primacy of competition and consumer protection laws to govern conduct by Internet providers, just as they do everywhere else in the economy.

As Chairman Pai puts it:

“[A]s a result of my proposal, the Federal Trade Commission will once again be able to police ISPs, protect consumers, and promote competition, just as it did before 2015. Notably, my proposal will put the federal government’s most experienced privacy cop, the FTC, back on the beat to protect consumers’ online privacy.”

Consumers are not left without government oversight. Not only does the Order return authority to the FTC, it also requires ISPs to disclose how they will treat traffic and be held accountable for any deviation from their claims. As under Section 5 of the FTC Act, deceptive disclosures or unfair practices — practices that have the actual effect of harming consumers — will be subject to FTC enforcement.

As Chairman Pai describes the proposed rules in today’s op-ed:

“[T]he FCC simply would require internet service providers to be transparent so that consumers can buy the plan that’s best for them. And entrepreneurs and other small businesses would have the technical information they need to innovate…. Instead of being flyspecked by lawyers and bureaucrats, the internet would once again thrive under engineers and entrepreneurs.”

Chairman Pai must be commended for the process by which he has introduced the new rules. Today he shares his proposed rules with his fellow commissioners and tomorrow he will release the full text of the rules to the public, a full three weeks before the Commission will vote on them.

Sadly, this has not been the norm. Rather, since the 1970s the Commission has voted on proposed rules without public disclosure of the text until an undetermined time after the vote.

The last time around, under Chairman Wheeler, the text of the Open Internet Order wasn’t released until 14 days after the vote, and the Order itself had undergone a complete transformation from NPRM to Order.

Nothing about that process was open or transparent, and, not surprisingly, the 2015 Order evinces virtually no consideration of opposing views or rigorous analysis of complex and controversial issues.

Chairman Pai has changed all of that, and followed basic rules of good governance that actually facilitate discussion and debate over the proposed regulations.

A fuller analysis of Chairman Pai’s proposed Order will have to await its release (and the wearing off of the stultifying effects of L-Tryptophan and over-indulgence). But it seems clear that the Chairman’s office has taken a careful, rigorous, and humble approach to fixing the regulatory mess of the 2015 OIO.

Selected ICLE work on this issue:

• ICLE Notice of Ex Parte on Restoring Internet Freedom, here
• ICLE Economics and Policy Comments on Restoring Internet Freedom, here
• ICLE Privacy Comments on Restoring Internet Freedom, here
• US Telecom v. FCC, US Supreme Court Amicus of ICLE and affiliate Gus Hurwitz, here
• The Feds Lost on Net Neutrality, But Won Control of the Internet, Wired, here
• Net Neutrality’s Hollow Promise to Startups, Computerworld, here
• Since When Is Free Web Access a Bad Thing? The Wall Street Journal, here
• How to Break the Internet, Reason Magazine, here
• Net Neutrality is Bad for Consumers and Probably Illegal, Truth on the Market, here
• Court strikes down Net neutrality rules but grants FCC sweeping new power over Internet, Truth on the Market, here
• Thirty-two Scholars of Law and Economics Urge the FTC to Advise the FCC to Employ Case-by-Case Rules in Regulating Net Neutrality, Letter to the FTC , here

About ICLE:

The International Center for Law & Economics is a nonprofit, nonpartisan research center. Working with a roster of more than fifty academic affiliates and research centers from around the globe, we develop and disseminate academic output to build the intellectual foundation for rigorous, economically-grounded policy.

This week, the International Center for Law & Economics (ICLE) filed an ex parte notice in the FCC’s Restoring Internet Freedom docket. In it, we reviewed two of the major items that were contained in our formal comments. First, we noted that

the process by which [the Commission] enacted the 2015 [Open Internet Order]… demonstrated scant attention to empirical evidence, and even less attention to a large body of empirical and theoretical work by academics. The 2015 OIO, in short, was not supported by reasoned analysis.

Further, on the issue of preemption, we stressed that

[F]ollowing the adoption of an Order in this proceeding, a number of states may enact their own laws or regulations aimed at regulating broadband service… The resulting threat of a patchwork of conflicting state regulations, many of which would be unlikely to further the public interest, is a serious one…

[T]he Commission should explicitly state that… broadband services may not be subject to certain forms of state regulations, including conduct regulations that prescribe how ISPs can use their networks. This position would also be consistent with the FCC’s treatment of interstate information services in the past.

Our full ex parte comments can be viewed here.

Summary

This case raises significant questions about the thoroughness with which a court must review agency decisionmaking—or the extent to which a court may instead defer to that decisionmaking—when the agency has reversed a prior policy determination in the absence of a change in applicable law.

The Open Internet Order (“OIO”) issued by the Federal Communications Commission (“FCC” or “Commission”) presents such a policy reversal. The FCC ostensibly rooted the OIO in sufficient factual and legal analysis, but closer examination reveals that the OIO is based upon implausible factual assertions, questionable factual reinterpretations, and the strategic disavowal of long-defended statutory interpretation, all in support of a radical change in federal telecommunications policy that raises questions of vast economic and political significance.

Nevertheless, as discussed in Part I, the D.C. Circuit opinion affirming the OIO reflexively afforded substantial deference to the FCC, declining to consider serious questions about the reasonableness or permissibility of the FCC’s decisionmaking process. That decision is both in tension with this Court’s precedents and, more, raises exceptionally important and previously unaddressed questions about this Court’s precedents on judicial review of agency changes of policy.

As discussed in Part II, recent empirical work suggests that there are systematic problems with judicial review of agency changes in policy. These problems—respecting the substantive quality of agency and judicial decisions as well as judicial understanding of, or compliance with, this Court’s precedents governing such review—have led to consistently inconsistent review of agency policy changes in the circuit courts. Judicial review of agency policy changes thus presents a certiorari doublewhammy: there is a need for this Court to clarify existing precedent regarding judicial review of such policy changes and to address inconsistent application of that precedent, as well as for this Court to consider whether evidence of systematically problematic decisionmaking when agencies change policies militates in favor of a more searching standard of review.

Part III discusses how the D.C. Circuit and the Commission’s OIO implicate these concerns.

A new article by Professors Cass Sunstein and Adrian Vermeule highlights the exceptional significance of this issue. See Cass R. Sunstein & Adrian Vermeule, The Morality of Administrative Law, HARV. L. REV. (forthcoming 2018). In discussing empirical evidence collected by Professors Kent Barnett and Christopher Walker (discussed in Part II), Sunstein and Vermeule note that there is a “discrepancy between the law on the books and the law in action” when it comes to how courts review changes in agency policy. Id. (manuscript at 24) (https://papers.srn.com/abstract_id=3050722).

In National Cable & Telecommunications Ass’n v. Brand X Internet Services, 545 U.S. 967 (2005), this Court held that an agency’s alteration of policy is not grounds for heightened scrutiny. Id. at 981 (“Agency inconsistency is not a basis for declining to analyze the agency’s interpretation under the Chevron framework. Unexplained inconsistency is, at most, a reason for holding an interpretation to be an arbitrary and capricious change from agency practice under the Administrative Procedure Act.”). But, as Sunstein and Vermeule observe, “Brand X notwithstanding, the Court just isn’t particularly clear or consistent about the role of consistency under Chevron.” Sunstein & Vermeule, supra (manuscript at 23-24 n.159).

Indeed, “[a]t the level of individual cases, although no subsequent case has denied the rule expressly laid out in Brand X, opinions have occasionally adverted to consistency as a Chevron factor—including opinions for the Court.” Id. (ms. at 23). Moreover, contrary to the rule laid out in Brand X, “[a]t the level of large-N research, recent work by Chris Walker and Kent Barnett shows that judges in fact tend to defer more heavily to consistent agency interpretations.” Id. (ms. at 23-24).

In this instance, it seems likely that the policy under review will reverse course yet again, with the agency returning to the pre-OIO interpretation of the
law and issuing new rules consistent with that interpretation. Indeed, it must be acknowledged that the FCC could reverse the OIO as soon as December of this year. Under ordinary circumstances this would appear to moot, or at least substantially lessen, the concerns raised by petitioners here.

But the foreseeability of significant administrative policy changes—in this case and elsewhere—abetted by the precedent of substantial deference established in this case, militates in favor of the Court granting
certiorari. Should the FCC reverse the OIO, it is a foregone conclusion that supporters of the current order will challenge that reversal in a proceeding that will raise many of the same legal concerns currently at issue. The issuance of a new rule will thus not moot the issues in this case, but simply raise the precise issues yet again. Indeed, without clear guidance from this Court, there is every reason to believe the process will become an endless feedback loop—in the case of this regulation and others—at great cost not only to regulated entities and their consumers, but also to the integrity of the regulatory process.