Net Neutrality Rules Expected to Mean More Power for FCC Enforcement Bureau

The rules aren't expected to be made public for several more weeks (see 1503030059). Chairman Tom Wheeler said at the Feb. 26 meeting at which the rules were approved that they leave discretion to the FCC to decide whether something is a “just and reasonable activity” or should be blocked by the commission (see 1502260043). Commissioner Ajit Pai said the order leaves many policy calls to the Enforcement Bureau, meaning “substantive regulation being done at the bureau level.”

“The commission has been actively expanding its jurisdiction through enforcement actions,” said ex-Commissioner Robert McDowell, now at Wiley Rein. “The current​ trend appears to reveal that it is likely to engage in policymaking through enforcement.” Rulemaking through enforcement raises Administrative Procedure Act (APA) issues, McDowell told us. “Civil servants could be shaping new rules, constructively new rules, without the benefit of public notice and comment or votes by commissioners,” he said. “This will lead to even more litigation and Congressional action."

Everyone wants rules that are as “specific and bright-line as possible,” said Michael Calabrese, director of New America’s Wireless Future program. But Calabrese sees the need for the FCC to rely more heavily on the bureau. “An active and empowered Enforcement Bureau is necessary to ensure that complaints don’t languish, and that edge cases don’t remain unresolved, simply because they don’t rise to the level of a notice and comment proceeding and vote by the commissioners,” he said. “The commissioners should stand ready to clarify or even reverse the rare bureau-level decisions that runs off the rails.” Requiring a formal rulemaking and commissioner vote on every complaint “would be a recipe for gridlock and greater uncertainty,” he said.

Arguments the FCC would violate the APA by having decisions made at the bureau level are “silly,” said Matt Wood, policy director at Free Press. “It's useful for the ISPs to have their current and former attorneys like McDowell and Pai making these claims, but they don't hold any water.” Based on publicly available information on the order, “my sense is that this new sort of advisory opinion process is non-binding when it comes to offering guidance on new practices,” Wood said. “Any substantive decisions would of course be made by the full commission or by the bureau on properly delegated authority.”

“It is well settled that an agency can develop rules through notice-and-comment proceedings or through adjudication,” said Steptoe and Johnson attorney Markham Erickson, who represents Netflix and others. “Both routes are available and both require adherence to due process.”

ALJs Have Role to Play

Doug Brake, telecom policy analyst at the Information Technology & Innovation Foundation, said case-by-case analysis is generally a good thing, but the FCC should think twice about leaving decisions in the hands of the Enforcement Bureau. “This is one more area where the FCC should consider an expanded role of administrative law judges,” he said. “Seems if we want case-by-case analysis, why not make the process more explicitly quasi-judicial, or at least put some more process around it than relatively unpredictable enforcement actions?”

The net neutrality rules “seem to herald a new era of rampant regulatory growth that, if left unchecked, will slow innovation down to the speed at which the machinery of government operates,” said Michael Santorelli, director of the Advanced Communications Law & Policy Institute at New York Law School. It's up to Congress to “articulate a vision for how 21st century communications services of all kinds should and should not be regulated,” he said. “A full update of the Communications Act is the only way this will happen.”

“One could argue that cases of first impression interpreting a new rule in an area as complex and fraught with difficulty as Internet access should be decided by the full commission rather than delegated to the staff,” said Cinnamon Mueller cable attorney Barbara Esbin. She said the FCC already is taking a more aggressive approach on enforcement, with higher fines and sometimes “novel interpretations” of the commission’s authority. “This should be of great concern to ISPs facing common-carrier regulation for the first time in their provision of broadband Internet access service,” she said.

TechFreedom President Berin Szoka warned against a growing tendency of the FCC to rely on case-by-case decisions, without a clear standard to follow. “From what FCC lawyers said at the press conference after the open meeting, it sounds like the general conduct rule will be akin to the unfairness standard of the 1970s -- the vague, open-ended standard that set the FTC on an enforcement and rulemaking spree that earned it the ‘National Nanny’ nickname from [T]he Washington Post,” Szoka said in an email. “FTC's overreach was so blatant that even the heavily Democratic Congress briefly shut down the agency, allowing it to survive only in exchange for limiting the definition of Unfairness in the Policy Statement issued at the end of 1980.” Szoka also warned against FCC use of what he called “unadjudicated pseudo-common law.” Even “the soundest standard can only constrain the regulator's discretion if the courts require the regulator to prove its case,” he said.

Free State Foundation President Randolph May said he has less concern with where decisions are made than that they're based on a “properly delineated market-oriented standard as opposed to an open-ended one such as 'just and reasonable.'” May said the systems the FCC is constructing remind him of “the one that existed in England when the kings exercised what was called the 'dispensing power' to favor certain subjects over others through the exercise of the royal prerogative."