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Lawyers Gear Up for Legal Challenges to FCC on Net Neutrality

July 20, 2021, 9:01 AM

President Joe Biden’s net neutrality recommendations for the Federal Communications Commission likely will trigger a slew of legal challenges should the agency take them on, lawyers and former agency officials said.

Among other policy recommendations, Biden in his July 9 competition executive order “encourages” the FCC to restore Obama-era net neutrality rules. The rules originally were crafted by Democrats who allege internet service providers are slowing down or blocking online services for consumers. In 2017, the FCC under former Republican chair Ajit Pai rolled back the rules, with the support of former President Donald Trump and the broadband industry.

Opponents of the policies laid out in Biden’s executive order will attack the FCC on multiple fronts, lawyers and former agency officials said. FCC acting chair Jessica Rosenworcel has not announced plans to initiate a rulemaking process to restore net neutrality rules, but she is a longtime supporter of them, telling reporters last week that she wants “to see open internet rules become the law of the land.”

Observers expect the commission to take on the restoration of net neutrality rules after a fifth, Democratic commissioner is appointed, and lawyers are preparing.

“The one certainty here is that industry will give their lawyers an unlimited budget to fight the proposals and the lawyers will exceed it,” former Democratic FCC official Blair Levin said. “That is, they—like Amazon’s lawyers seeking to recuse Federal Trade Commission Chair Lina Khan from any issue affecting Amazon—will leave no stone unturned in terms of challenges.”

The exact legal challenges will depend on the details of the FCC’s notice and rulemaking process. But because net neutrality has been caught in the crosshairs in recent years, lawyers are expecting iterations of similar challenges to come up.

The FCC did not immediately respond to a request for comment.

Administrative Procedure Act

From the outset, the executive order itself will provide opponents a springboard for the package of legal challenges they’ll likely bring to court, said Tom Johnson, general counsel under Pai. Johnson in 2019 defended the repeal of net neutrality before the D.C. Circuit Court of Appeals.

“When I was general counsel at the FCC, you never wanted to be responding to an argument that you had predetermined the answer to a rulemaking,” Johnson, now a partner at Wiley Rein LLP, said. “It was an argument that could be raised in court to defeat whatever you were trying to accomplish. And unfortunately, through this executive order, the president has handed opponents of whatever the FCC decides to do next an argument that this was a predetermined outcome.”

Tarnishing the FCC’s authority as an independent agency may be a violation of the Administrative Procedure Act, which requires agency decision makers to keep an open mind in the course of rulemaking proceedings before reaching a policy conclusion, Johnson said.

Johnson and other lawyers noted that argument would require a high burden of proof and would likely fail, given that Obama and Trump both were open about what they believed the FCC should do. Regardless, the argument is expected to be raised as part of a package of challenges—as it was in past litigation—and it’s not a challenge the agency will want to deal with from the outset, they added.

Lawyers pointed to other legal challenges that have a higher likelihood of success against the FCC, including the APA’s requirement that the FCC provide a reasonable explanation for changing its policy.

The FCC under Pai successfully proved in the D.C. Circuit that repealing Obama’s net neutrality rules was necessary. Now Rosenworcel’s FCC is expected to have to defend why reversing course yet again is justified.

“It’s really going to come down to what the agency says is its justification and how it processes the comments that it has received,” Boston College Law School associate dean of academic affairs and professor Daniel Lyons said. “The agency has to explain in a way that the court finds adequate, why it no longer believes what it believed in 2017, which is that a ‘light-touch’ regulatory approach was going to be better for investment and better overall policy.”

“The most important thing” that the APA will require of the FCC will be proof that the agency reasonably reached its conclusion for a policy change using facts gleaned from the record, Hogan Lovells partner and former FCC legal adviser Ari Fitzgerald said. The court also will grant the FCC a degree of deference as the expert agency designated by Congress to regulate the telecommunications industry, Fitzgerald said.

The “Chevron deference” doctrine in administrative law stipulates that when the authority delegated by Congress to an administrative agency on a particular issue is implicit, a court may not substitute its own interpretation of the statute for a reasonable interpretation made by the administrative agency.

Because this would be the third time in the last six years that the FCC would change net neutrality, Johnson said the court will likely raise questions over the breadth of Chevron deference and the extent to which the FCC should be accorded that.

While “independent agencies do have the right to change their minds,” Fitzgerald said it would be better if Congress passed laws addressing net neutrality instead of having a “pendulum swing every time there is a change in administration.”

To contact the reporter on this story: Maria Curi at mcuri@bloombergindustry.com

To contact the editors responsible for this story: Kibkabe Araya at karaya@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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