Sixth Circuit Puts Net Neutrality Rule on Ice

A three-judge panel concludes the rule's challenger are likely to succeed on the merits.

Today a panel of the U.S. Court of Appeals for the Sixth Circuit granted broadband providers' request for a stay of the Federal Communications Commission's rule that would classify broadband internet providers as common carriers under the Communications Act, often referred to as "net neutrality." According to the panel, the broadband providers were likely to succeed on the merits--in part due to the major questions doctrine--and this justified staying the rule pending review of their petitions. The panel consisted of Chief Judge Sutton and Judges Clay and Davis.

From the court's unanimous per curiam order:

Broadband internet refers to the set of platforms that permit users to access the internet at speeds faster than dial-up services. . . . Over three-quarters of Americans have access to high-speed broadband service. . . . In addition to renting or constructing the physical network connecting computers, broadband internet providers offer other services that enable subscribers to access content from "edge providers"--namely websites, such as Google, Netflix, and Amazon, that host content on their own networks. . . . These services include DNS, short for Domain Name Services, a "phonebook" that matches web addresses (e.g., http://www.ca6.uscourts.gov) with their IP (internet protocol) addresses. And they include "caching" services that speed up data access by storing copies of edge provider content closer to the user's home system. . . .

The Communications Act of 1934 covers broadband providers, and it gives the Federal Communications Commission authority to promulgate rules and regulations under the Act. The extent of that regulatory authority turns on whether the providers count as common carriers under the Act. If a business counts as a common carrier, it must comply with Title II of the Act, which includes rate-review regulations and non-discrimination obligations. . . . For other businesses, the Commission may impose only the ancillary regulations authorized under Title I, which generally preserve the ability of companies to respond to market conditions. . . .

The development of the internet presented the Commission with a classification challenge. When Congress first enacted this law in 1934, it defined common carriers to include anyone involved in "wire communications." . . . Think telephone companies and the monopolies that went with them. But by the 1970s, telephone companies and others had begun competing to offer data processing services through telephone wires. . . . Common carrier rules designed for telephone-wire monopolies, the Commission realized, could inhibit the development of "data information services." . . . The Commission responded by distinguishing the "basic transmission service" that transferred data between two points from the "enhanced service" that allowed subscribers to interact with data stored elsewhere.

Responding to these developments, Congress enacted the Telecommunications Act of 1996. It established a new category of "telecommunications service," which offers "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." . . . The Commission must treat telecommunications service providers as common carriers. . . . The 1996 Act also created a new category of "information service," which applies to a company that offers "a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." The Commission may not treat information service providers as common carriers. . . .

After passage of the 1996 Act, the Commission for many years took the view that broadband internet access services were information services, not telecommunication services. That left them free of Title II's common carrier requirements. . . .

Reviewing a decision from the Ninth Circuit, the Supreme Court upheld this classification under Chevron. [See Brand X]. . . Specifically, the Supreme Court found that the classification of broadband internet access offered through cable modems as an information service was a permissible interpretation of the Communications Act. . . .

In 2010, the Commission continued to treat broadband internet services as something covered by Title I but opted to alter its rules based on a debate over the risk that broadband providers could favor some edge providers' content over others. . . . The Commission tried to use its Title I authority to impose "open internet" rules on broadband providers that banned them from blocking or unreasonably discriminating between lawful content. . . . A federal court invalidated this rule on the ground that the Commission could impose such requirements only under Title II.

The next chapter unfolded in 2015. That year, the Commission promulgated a rule that categorized broadband providers as common carriers and required net neutrality under Title II. . . .

In 2018, the Commission returned to its prior view. It issued a new rule that broadband providers fall under Title I and do not qualify as common carriers. . . . The D.C. Circuit again upheld the classification and again did so under Chevron. . . .

On May 22, 2024, the Commission switched positions again. Under its current rule, the Commission has classified broadband providers as common carriers under Title II. . . . The rule requires broadband providers to disclose "accurate information regarding the network management practices" and forbids them from engaging in blocking, throttling, paid prioritization, and "unreasonable interference" with users and edge providers. . . . The rule at this point forbears other Title II regulations, including rate regulation and tariffing. . . .

The petitioners are likely to succeed on the merits because the final rule implicates a major question, and the Commission has failed to satisfy the high bar for imposing such regulations. Although the petitioners have raised other arguments in support of their position that the FCC exceeded its authority in promulgating the rule at issue, such as whether broadband can be classified as a telecommunications service under the Communications Act and the stare decisis effect of the Brand X decision, we decline to reach those arguments at this preliminary stage.

An agency may issue regulations only to the extent that Congress permits it. . . . When Congress delegates its legislative authority to an agency, it presumably resolves "major questions" of policy itself while authorizing the agency to decide only those "interstitial matters" that arise in day-to-day practice. . . .When Congress upsets that presumption and delegates its power to “alter the fundamental details of a regulatory scheme” to an agency, it must speak clearly, without "hid[ing] elephants in mouseholes." The more an agency asks of a statute, in short, the more it must show in the statute to support its rule.

Net neutrality is likely a major question requiring clear congressional authorization. As the Commission's rule itself explains, broadband services "are absolutely essential to modern day life, facilitating employment, education, healthcare, commerce, community-building, communication, and free expression," to say nothing of broadband's importance to national security and public safety.

Congress and state legislatures have engaged in decades of debates over whether and how to require net neutrality. Because the rule decides a question of "vast economic and political significance," it is a major question. . . . The Communications Act likely does not plainly authorize the Commission to resolve this signal question. Nowhere does Congress clearly grant the Commission the discretion to classify broadband providers as common carriers. To the contrary, Congress specifically empowered the Commission to define certain categories of communications services--and never did so with respect to broadband providers specifically or the internet more generally. . . . Absent a clear mandate to treat broadband as a common carrier, we cannot assume
that Congress granted the Commission this sweeping power, and Petitioners have accordingly shown that they are likely to succeed on the merits. . . .

Chief Judge Sutton also wrote a separate concurrence, emphasizing that even without the major questions doctrine, the FCC would likely lose. As Sutton notes, "The best reading of the statute, and the one in place for all but three of the last twenty-eight years, shows that Congress likely did not view broadband providers as common carriers under Title II of the Telecommunications Act."