USTelecom Files Another Challenge of Net Neutrality Order

USTelecom filed another appeal of the FCC’s net neutrality order, as expected, Monday, asking the U.S. Court of Appeals for the D.C. Circuit to declare it “unlawful.” The commission’s “overreach is not only legally unsustainable” but “unwise given the enormous success of the commission’s [Communications Act] Title I approach for consumers, businesses and Internet entrepreneurs,” USTelecom President Walter McCormick said in a statement. USTelecom and Alamo Broadband (see 1503230066) filed appeals March 23 in the D.C. and 5th U.S. Circuit Court of Appeals respectively under a theory that a 10-day deadline for appeals to be eligible for a lottery to determine which circuit will hear the cases ended that day.

More appeals from other industry groups could be filed this week, as early as Tuesday. NCTA and CTIA have been seen as potential litigants, but neither organization discussed its plans Monday.

USTelecom had said in the previous filing it believes "the better view" is that the clock begins with the publication of the order in the Federal Register, which occurred Monday. USTelecom Senior Vice President-Law and Policy Jonathan Banks told reporters Monday the association filed the earlier appeal in case the courts had a different view, because it “wanted to be sure not to miss a deadlines in an order as important as this.”

Banks declined to speculate whether any more appeals would be filed in other circuits, which would set off another lottery. The D.C. Circuit won the lottery to hear the earlier USTelecom and Alamo Broadband petitions (see 1503300055). The FCC is expected to file a motion to dismiss the initial two appeals as premature, though the agency didn’t say Monday when the motion will be filed.

The order’s publication also spurred predictions from both sides of the net neutrality debate, with Communications Act Title II proponents including the FCC saying the order would survive legal challenges and opponents saying it would fail. “Now, the FCC can start counting down to losing in court for the third time,” Tech Freedom President Berin Szoka, said in a statement. “The Commission’s disregard for transparency, proper procedure, and the Constitution will prove to be its undoing.” Free Press Policy Director Matt Wood said in a statement, the “publication of the rules brings us one step closer to having the enforceable Net Neutrality protections that millions of Americans have called for.”

USTelecom in Monday’s petition for review called the order “arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act” (APA). The order “violates federal law,” including the U.S. Constitution and the Communications Act, and agency regulations and federal notice-and-comment rulemaking requirements, the petition said. Banks said the specifics of the association’s argument will be fleshed out in briefs over the summer, but noted filings on the agency’s record question whether the agency provided adequate notice of reclassifying broadband under Title II.

Opponents have raised the APA issue, including Szoka on Monday. The agency should have opened a new rulemaking “after scrapping its initial, more modest proposal, in favor of [President Barack Obama's] Title II plan,” Szoka said referring to the agency shifting gears from the so-called Section 706 fast-lane approach floated in last year’s NPRM. But rather than striking down the order entirely, Szoka said the court “may simply remand the case to the FCC without addressing any of the other legal questions -- and the agency will have to start over again from scratch with all the same substantive legal problems as today.” The order’s attempt to modernize the Communications Act by reclassifying broadband but “arbitrarily forbearing from most of Title II” may have violated separation of powers provisions of the Constitution by effectively rewriting the 1934 law, Szoka said.

Banks said USTelecom is also “thinking through” the possibility of seeking a stay, and noted a decision would have to be made before the order takes effect in 60 days. The agency said Friday the order will take effect June 12 (see 1504100046). Banks also said appeals could be decided more quickly than those challenging the agency’s 2010 order. Appeals can't be filed until publication in the Federal Register, which occurred more quickly this time. The 2010 rules were published on Sept. 23, 2011 -- more than nine months after they were adopted on Dec. 12, 2010, the agency said. The FCC approved this year’s order less than two months ago, on Feb. 26.

McCormick also called this year’s order “unnecessary” because ISPs already are operating “in conformance with the open Internet standards” advanced by Obama, and he supported Congress' adopting net neutrality regulations under Section 706. Challenging the order didn't reflect disagreement with Open Internet rules, McCormick also said, “but instead the unjustifiable shift backward to common carrier regulation after more than a decade of significantly expanded broadband access and services for consumers under light-touch regulation.”

Congressional Republicans have discussed creating net neutrality rules without reclassifying broadband. Some on Monday pushed the idea that the legal challenges may spur congressional action. “Congressional Democrats may feel strong pressure to negotiate a legislative compromise,” Szoka observed in a statement.

“Instead of relying on the uncertain future of public utility regulation soon to be imposed on the Internet, we encourage Congress to use this window of opportunity [during the appeals process] to craft legislation that sets forth permanent rules to advance Internet openness, and continued investment and innovation in the nation’s vibrant 21st Century digital broadband economy,” the Internet Innovation Alliance said in a statement.

“The irony of the decision to reclassify the Internet as the telephone network is that it dramatically weakened the legal case for regulations to protect the open Internet,” said Fred Campbell, director of the Center for Boundless Innovation in Technology, in a statement. “The FCC’s rationale for reclassification is a tour de force of fallacious reasoning and novel theories that will have judges scratching their heads,” Campbell’s statement said.

The agency, however, said in a statement, it's “confident the FCC’s new Open Internet rules will be upheld by the courts, ensuring enforceable protections for consumers and innovators online.” Public Knowledge Senior Vice President Harold Feld said the appeal was expected given the earlier appeal. Wood said that despite what he called widespread and bipartisan support for the order, “phone and cable companies are still scheming to overturn these freedoms. These companies and their lawyers and lobbyists have been trying to scare lawmakers away from the restoration of these common-sense rules with misinformation about alleged harms to investment and innovation."

“They have threatened all along to sue over the FCC's decision, even though that decision is supported by millions of people and is absolutely essential for our economy,” Wood said. “While Internet service providers will spend buckets of money to woo Congress and file lawsuits, people everywhere will continue fighting for the open Internet protections they won."