Congress Unlikely to Move Net Neutrality Legislation this Year, After DC Circuit Upheld Order

“It's a lot more difficult to legislate,” said Senate Communications Subcommittee ranking member Brian Schatz, D-Hawaii, in an interview. “I think the possibility of an adverse ruling was impetus for both sides to negotiate a legislative solution, but now that we have a ruling that supports the open internet order, there’s less of an incentive for Democrats to work on a legislative compromise. … I don’t know about off the table but I think it’s a lot less likely now that there’s been this ruling.”

House Communications Subcommittee ranking member Anna Eshoo, D-Calif., scoffed at the notion of bipartisan legislation and said Democrats clearly had backed the net neutrality rulemaking. “The court confirmed that today,” Eshoo told reporters. “It’s one of the best days of my legislative life, I have to say that. I have a very deep sense of gratification and joy because it’s good for everyone. And look at the millions of people that weighed in at the FCC. It’s never happened. It’s history. So people have strong feelings about this, and this is a clean sweep.”

Last year, Senate Commerce Committee Chairman John Thune, R-S.D., House Commerce Committee Chairman Fred Upton, R-Mich., and House Communications Subcommittee Chairman Greg Walden, R-Ore., proposed legislating with Democrats on a compromise that would have avoided the Communications Act Title II reclassification of broadband that the court upheld in exchange for legislatively codifying net neutrality rules. Schatz had supported the negotiation that was ongoing for much of 2015 between Thune and Commerce Committee ranking member Bill Nelson, D-Fla. “No one came up with a compromise,” Eshoo said of the lack of House negotiation. “The word was thrown around. … They had plenty of time to do it, but it hasn’t been there.”

Legislation is better but “I’m a realist, too,” Walden told us. “I can’t believe President [Barack] Obama, who dictated this policy to the FCC, is going to sign a bill we put on his desk. … But we’ll look at options and other ways forward. Because I just think it’s an overreach by the FCC on policy.” Walden suspected the issue wouldn't be dealt with legislatively for the remainder of this session of Congress “because we’re not in session that much,” he said. “And you’d have to have 60 in the Senate or do it in a budget reconciliation, neither of which we have.” Walden was “sort of surprised to see Senator Nelson fully embrace the court’s decision,” he said, referring to what had been ongoing negotiation between Thune and Nelson. “That’s been going for a year and a half or so, which we’re cognizant of," Walden said. Nelson released a statement Tuesday referring to the ruling as a “significant milestone.”

The decision immediately prompted some calls for legislation. “Today’s decision is a clear signal that my colleagues and I need to reestablish Congress’ appropriate role in setting communications policy on a bipartisan basis,” Thune said in a statement. “As Judge [Stephen] Williams warns in his dissent, by ‘shunt[ing] broadband service onto the legal track suited to natural monopolies,’ the FCC’s order may actually foster ‘the prevalence of incurable monopoly.’ Congress must not allow that to happen.” NCTA and the Information Technology and Innovation Foundation called for congressional reaction.

Clinton, Sanders Cheer

“Today's #NetNeutrality decision is a big win for consumers, innovation, and freedom of expression on the internet,” Democratic presumptive presidential nominee Hillary Clinton tweeted. “Today's decision will help ensure we don't turn over our democracy to the highest bidder,” Democratic presidential contender Sen. Bernie Sanders of Vermont tweeted. Many other Democrats, including leaders such as Sen. Chuck Schumer, D-N.Y., issued statements lauding the news. Republican presumptive nominee Donald Trump's campaign didn’t respond to a request for comment.

White House Press Secretary Josh Earnest dubbed the ruling “a victory for the open, fair, and free Internet as we know it today -- one that remains open to innovation and economic growth, without service providers serving as paid gatekeepers. Unsurprisingly, today’s ruling affirms those basic realities, and recognizes that an Open Internet is essential for preserving an environment that encourages new investment in the network, new online services and content, and everything else that makes up the Internet as we now know it. That is why the president has so strongly supported net neutrality since he was a senator, and continues to work every day to protect the Internet ecosystem: because it remains one of the greatest gifts our economy -- and our society -- has ever known.”

Republican lawmakers savaged the ruling. It "reinforces the importance of the Restoring Internet Freedom Act,” which “aims to nullify the FCC’s Open Internet Order,” Sen. Mike Lee, R-Utah, said. Sen. Steve Daines, R-Mont., slammed the ruling as “abhorrent.” Upton and Walden “hope that the courts will reverse this decision and uphold the letter of the law to protect consumers and allow the Internet industry to innovate and invest,” they said in a joint statement.

Preceded Hearing

The ruling was announced minutes before Walden convened a Communications Subcommittee hearing on the FCC’s ISP privacy rulemaking, which emanated from the order’s reclassification and divided Republicans and Democrats. Walden didn’t mention the court ruling in his opening statement. Commerce Committee ranking member Frank Pallone, D-N.J., and Eshoo both did.

“It seemed like it was a big win for consumers and it puts the FCC’s privacy proposals on firm legal ground,” Pallone said during the hearing, later releasing a long statement praising the ruling. After the ruling, “getting privacy right is even more important,” former FTC Chairman Jon Leibowitz told subcommittee lawmakers, saying the privacy NPRM threatens “to undermine” U.S. position on cross-border data flows and the privacy shield. He represents telecom companies belonging to the 21st Century Privacy Coalition and is an attorney with Davis Polk. “It’s clear that the FCC has oversight and consumer protection authority for broadband,” said Rep. Doris Matsui, D-Calif.

“We’re still evaluating the decision, 184 pages, but it seems pretty clear it was a divided court though, 2 to 1,” Walden said later Tuesday. “Just because they ruled the FCC acted legally, doesn’t A) mean it won’t be appealed, which it apparently will be, and B) that it was good policy, and so we still believe there’s a better way to do the policy that won’t stifle innovation and creativity on the internet and still provide consumer protections. … You’ve got an FCC that can’t finish a quadrennial review in what, seven or eight years, on media ownership, and now you’re turning the whole internet over to that bureaucracy.” The FCC is expected to circulate a quadrennial review order by the end of June (see 1606140052).

Rep. John Shimkus, R-Ill., discussed a telecom rewrite during the hearing and in his statement on the D.C. Circuit ruling. Shimkus is vying to lead the Commerce Committee next Congress and is widely believed to be in fierce competition with Walden for that job. Shimkus told us the Communications Act overhaul he envisions should happen in the next Congress.

“It just speaks to that,” Shimkus said in an interview of the connection between the court ruling and a broader rewrite. “Because what they’ve done is taken a round peg and tried to shove it through a square hole. … So the court’s ruling is judicial legislating, we would argue, but that speaks to the need to rewrite the law.” He didn’t want to speak for Upton and Walden and was unsure of congressional action this year. “The clock is ticking,” Shimkus told us. “It’s very difficult. You still have it going to the Supreme Court. But I don’t know what we would do unless we would do something on an appropriation bill but the way we’re kind of limiting that, I’m not sure that even makes it.” Walden attempted to lead a telecom overhaul starting in December 2013 but it stalled amid the net neutrality legislative debates of 2015. Tuesday, Walden referred to net neutrality as the “big donkey in the room” that derailed the effort.

Appropriations Effect?

Republican appropriators didn’t rule out addressing net neutrality through that process. “Our provision calls for them to get settled,” said House Appropriations Financial Services Subcommittee Chairman Ander Crenshaw, R-Fla., in an interview about the rider that he included his the FY 2017 funding bill, cleared by committee last week and potentially freezing funds for the order's implementation while litigation pends. “That provision covers all these appeals. Until it gets settled, it’s kind of a legislative stay. … Our rider would cover it.” He also included the rider last year but it didn’t appear in the companion Senate funding bill.

Senate Appropriations Financial Services Subcommittee Chairman John Boozman, R-Ark., is preparing to release his bill text Wednesday for subcommittee markup and told us the issue could come up in a bigger way as the legislation advances. “We have our base bill and then we don’t know what’s going to happen in terms of amendments and things like that,” Boozman said. “Somebody could offer an amendment to the base bill and try to get that. You’d need to count the votes to make sure that you have those. But certainly that’s a possibility. … I think it will go ahead and get appealed to the Supreme Court. As far as what we’re going to do, it’s just happened so I think there’s a lot of people throughout the Capitol right now planning the next step forward.”

“I think we’ll continue to block appropriations riders and all the rest of it,” Schatz told us. “But most of the dynamics stay the same. It’s just that it gets harder to make the argument that both sides should come to the table and do a bill.”

House Speaker Paul Ryan, R-Wis., touted the Walden/Upton net neutrality draft bill from last year as part of his Reducing Regulatory Burdens task force platform, which he unveiled Tuesday. That bill “addresses consumer concerns without granting the FCC blanket authority to second-guess American business,” Ryan’s office said in his report, released as part of an initiative he’s dubbed A Better Way. It slammed Title II reclassification and pressed for various changes to the FCC and regulatory agencies more broadly. “In terms of the Better Way program, our effort to put out alternatives, it is to help our members have the ability to go home and talk about how we would do things differently if we have the opportunity,” Walden explained of the draft bill’s inclusion. He said no decisions have been made to try to advance the legislation.

“Is it that, though?” Eshoo said of the Ryan initiative. “Raising a new platform in almost August of the year that we’re going to adjourn at the end of September. That’s the agenda, at the end of the Congress? I thought agendas are raised in the beginning of the Congress, and then you take action on them. This is new to me. And I’ve been here since 1993. They’re reversing it. You put out your platform just as Congress is getting ready to shut down. I don’t think this speaks of real seriousness, I really don’t.”

Walden expected many of this issues would percolate and remain under debate throughout the next Congress and under the next administration. He has met with Trump but wasn’t aware of coordinating with the Trump campaign on telecom policy.

“The bigger question is the off-ramps,” Walden said, reflecting on the ruling. “You really have to step back. You all reported on the notion of manipulating data flow based on algorithms and things of that nature, which the companies have said they’re not doing. That’s the political side of this, you know, these allegations. But you know they can do it. So what’s that? In the information age, what’s a common-carrier platform look like? Is it just cables, is it just fiber? Or does it control the flow of information? I’m not saying it’s one or the other but I think it’s something that in the information age, just because you think you’re going somewhere, you may end up over here, and somebody’s making that decision.”