U.S. Cellular Seeks Supreme Court Reversal of USF Broadband Requirement

If the Supreme Court agrees with U.S. Cellular and other petitioners that the FCC doesn't have authority under Section 706 to regulate broadband, it would bolster the arguments of those pushing for net neutrality rules to be based on Title II authority, Comstock said. If the court rules otherwise, it would clarify the commission’s Section 706 authority in the net neutrality debate, he said. “If the Supreme Court takes up the case it could truncate [the net neutrality debate] by several years.” Comstock has said in comments to the FCC that the agency doesn't have Section 706 authority to implement net neutrality rules.

Lawrence Spiwak, president of the Phoenix Center and an opponent of a Title II net neutrality approach, said it’s a “long shot” the court will take up the Nov. 25 petition. The court “rarely grants certiorari when the agency involved does not support the petition,” he said. The Obama administration is also unlikely to “support certiorari given the FCC’s current efforts to write open Internet rules,” Spiwak said. The FCC "circumvented certain statutory procedural requirements and adopted rules which impermissibly regulate aspects of broadband Internet service as if it were a telecommunication service, and not the information service the FCC has concluded it to be," U.S. Cellular said in a statement. The FCC had no comment.

The FCC did not exceed its regulatory authority in requiring USF recipients to provide broadband, the 10th Circuit wrote, saying that under the Chevron doctrine, it was reasonable for the FCC to conclude that “Congress left a gap to be filled by the FCC” in specifying “precisely how USF funds may or must be used.” Chevron gives agencies broad deference to interpret ambiguous statutes. The 10th Circuit ruling backed the FCC’s reading of Communications Act Section 706(b) as an independent grant of authority. The section says the agency will “take immediate action” to accelerate broadband deployment if it finds broadband isn’t being deployed to all Americans in a reasonable and timely fashion.

But the petition to the Supreme Court said the 10th Circuit exhibited “deference” to the agency “that bordered on acquiescence.” Calling the broadband requirement “an obvious power-grab” by the agency, the petition said the 10th Circuit didn't consider the “limits Congress placed on the FCC’s Title II authority to administer the USF program.” FCC authority, the petition said, rests on Chapter 5, but Congress vested the FCC with authority to administer Chapter 5 of Title 47, the petition said. It said Section 706 “was never among the provisions of Chapter 5; it is codified among the broadband provisions of Chapter 12.”

When Congress passed Section 706(b), it was against the “backdrop” of the FCC subjecting entities that operated the “last-mile” Internet access facilities to Title II regulation. It envisioned that the FCC would employ its Title II authority to accelerate broadband deployment by telecommunications carriers, but allow information-service providers to continue deploying broadband "unfettered" by regulation, the petition said. In doing so, “Congress knew what it was doing in 1996” by not including broadband in Title II, the petition said. “It was granting the FCC no additional authority to prescribe rules to accelerate the deployment” of broadband, it said. If the FCC does not have legal authority over broadband, the Chevron deference would not apply, the petition said.

The petition also said the 10th Circuit decision of Section 706 authority over broadband conflicts with other circuit decisions such as the U.S. Court of Appeals for the D.C. Circuit’s decision in Verizon v. FCC. It said the FCC doesn't have authority to impose common carrier regulations on information service providers.

“The main hurdle” with the Supreme Court's taking up the petition, Comstock said, is that the court “only grants a small percentage of the petitions it receives.” But “this is an important issue and the Tenth Circuit decision is a very poor one," he said. "It is devoid of any statutory analysis or independent review of the legal issues.” The Supreme Court in Utility Air Group v. EPA “recently rebuked the agency for trying to rewrite the statute to avoid unfortunate consequences and I suspect the Supreme Court may be interested in providing similar guidance to the FCC,” Comstock said. Free Press Policy Director Matt Wood said the agency doesn't have authority under Section 706 to create net neutrality rules, and its best course to require CAF recipients to provide broadband is to reclassify broadband as Title II.

The petition stressed the importance of the issues involved in the case, saying the Supreme Court “has not decided whether the FCC has the statutory authority to regulate broadband service despite having classified all forms of the service as information services. The resolution of that question will have far-reaching consequences.” The question of the agency’s Section 706 authority over broadband is part of the net neutrality debate, the petition said, noting the agency’s proposed rules net neutrality rules “triggered a storm of controversy. A record-setting 3.7 million comments poured into the FCCat a rate that allegedly caused its Web site to crash … This case offers the Court the opportunity to test the FCC’s claim that it discovered in [Section 706(b)] an ‘unheralded power’ to regulate the $260 billion Internet marketplace.”