The Federal Communications Commission (FCC) recently adopted sweeping new rules designed to prevent so-called “digital discrimination” in the deployment, access, and adoption of broadband internet services. But an amicus brief filed by the International Center for Law & Economics (ICLE) and the Information Technology & Innovation Foundation (ITIF) with the 8th U.S. Circuit Court of Appeals argues that the rules go far beyond what Congress authorized.
It appears to us quite likely the court will vacate the new rules, because they exceed the authority Congress granted the FCC and undermine the very broadband investment and deployment that Congress wanted to encourage. In effect, the rules would set the FCC up as a central planner of all things broadband-related. In combination with the commission’s recent reclassification of broadband as a Title II service, the FCC has stretched its authority far beyond the breaking point.
Background
The Infrastructure Investment and Jobs Act (IIJA), which President Joe Biden signed in November 2021, provided $42.5 billion in funds to support building out broadband networks to unserved rural areas through the Broadband Equity, Access, and Deployment (BEAD) program. IIJA also allocated $14.2 billion to the Affordable Connectivity Program, which aims to foster broadband adoption among low-income households.
But tucked inside the massive infrastructure bill, Congress also instructed the FCC to adopt rules to “facilitate equal access to broadband internet access services” and prevent discrimination in deployment “based on income level, race, ethnicity, color, religion, or national origin.”
The FCC’s Overreach
In new rules that the commission issued earlier this year, the FCC interpreted this digital-discrimination mandate extremely broadly. The rules prohibit any policy or practice by broadband providers or other entities that could lead to a “differential impact” on broadband access across protected groups, even where there is no intent to discriminate.
The ICLE/ITIF amicus brief argues that this “disparate impact” standard goes far beyond what Congress intended and claims vast powers for the FCC that raise major economic and political questions.
Inconsistent with the IIJA
The disparate-impact standard is inconsistent with the text and structure of the IIJA, which focused on intentional discrimination in deployment decisions by broadband providers. The IIJA divided broadband-policy priorities among different agencies and programs, but the FCC’s rules go far beyond the limited scope of the digital-discrimination provision.
Exceeds statutory authority
Applying disparate-impact analysis to broadband-deployment decisions is inappropriate, as the U.S. Supreme Court has allowed such analysis only for statutes focused on “the consequences of actions rather than the mindset of actors.” The text of the IIJA’s digital-discrimination provision does not authorize the FCC to employ a disparate-impact analysis, and is more consistent with prohibiting intentional discrimination, not mere statistical disparities.
The IIJA is clear that the FCC’s rules should be aimed at preventing digital discrimination of access based on certain protected traits. The amicus argues that “based on” does a lot of heavy lifting. Based on a substantial set of opinions, courts have ruled that statutory prohibitions of discrimination “on the ground of” a protected trait refers to intentional discrimination.
The courts have indicated that if Congress wishes federal agencies to police discrimination on the basis of disparate impact, it must specifically allow for such an approach by including language such as “otherwise make unavailable.” The IIJA only specifies “based on” and omits “otherwise.” Thus, the amicus argues, Congress was clear that it intended to prevent only intentional discrimination. As such, the FCC exceeded its statutory authority.
Violates major questions doctrine
The rules claim authority far beyond what the statute contemplates, reaching issues of major political and economic importance. The FCC claims the ability to regulate broadband-pricing decisions, even though Congress explicitly stated the IIJA should not be used as a basis for internet rate regulation. And the rules apply to any entity that can “affect consumer access to broadband,” despite clearly being aimed at broadband providers.
Moreover, because nearly every business decision could lead to a disparate impact on one of the protected classes (most especially income), and there is no guarantee the FCC will agree that economic or technical feasibility justifies the disparity, covered entities would likely feel the need to get pre-approval from the FCC through its advisory-opinion process. Through this, the FCC has effectively made itself the central planner for all broadband decisions.
This vast authority was not clearly delegated by Congress, violating principles that agencies cannot decide major political and economic questions without clear congressional authorization.
Unintended Consequences
Perhaps most concerning, the brief argues, is that the FCC’s rules are arbitrary and capricious, as they will likely reduce broadband investment and deployment and thereby undermine the statute’s very purpose.
The disparate-impact standard the FCC proposes means that broadband providers face huge regulatory risks and liabilities any time their rational business decisions about where to invest in new networks produce even unintended statistical disparities across protected groups. Providers may choose to delay or cancel lucrative projects due to fear of discrimination claims.
The brief notes that differences in broadband availability are largely driven by factors like population density and terrain, which are outside the providers’ control. It’s nonsensical to punish providers for not overcoming these technical and economic realities simultaneously everywhere. Broadband providers would be less likely to make marginal investments to expand or improve their networks if they believed that doing so would subject them to liability under the digital-discrimination rules.
A more reasonable rule, the brief argues, would simply ban intentional discrimination by broadband providers in deciding where to build out their networks. This targeted approach would satisfy the statute’s goals while preserving critical investment incentives.
Instead, by radically expanding the agency’s authority and imposing a vague, unworkable regulatory framework, the FCC’s rules create tremendous uncertainty that will likely chill broadband deployment efforts and harm the very communities they aim to protect.
Unbounded FCC Power
Finally, the rules’ vagueness gives the FCC nearly unlimited authority over broadband-related decisions. Indeed, the FCC’s rules explicitly state that, with few exceptions, abiding by guidelines in other federal, state, and local programs will not provide a “safe harbor” against digital-discrimination claims.
No parties can be sure if the rules apply to them, or how to act consistently with the rules. And because even the advisory-opinion process fails to offer any guarantees, there is no way to obtain clarity about whether particular policies or practices violate the law. This means the FCC will be able to engage in arbitrary and discriminatory enforcement.
Conclusion
The FCC overstepped in adopting an approach detached from the statute’s text, precedent, and economic reality. If upheld, these rules risk undermining the competitive broadband marketplace that Congress sought to bolster. The court should set aside this order and require a more measured approach.