Breaking: Appeals court rejects FCC authority for Net Neutrality

The DC circuit Court of Appeals gave the Obama administration a big dash of cold water on the limits of its authority to impose rules on communications networks today.  In essence, the court recognized Comcast’s property rights to determine its own terms of service for Internet use, and the implications could affect Barack Obama’s plans to mandate broadband expansion as well (via Story Balloon):

A federal appeals court ruled Tuesday that the Federal Communications Commission lacks the authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks.

The ruling by the U.S. Court of Appeals for the District of Columbia is a big victory for Comcast Corp., the nation’s largest cable company. It had challenged the FCC’s authority to impose so-called “net neutrality” obligations on broadband providers. …

The decision also has serious implications for the massive national broadband plan released by the FCC last month. The FCC needs clear authority to regulate broadband in order to push ahead with some its key recommendations, including a proposal to expand broadband by tapping the federal fund that subsidizes telephone service in poor and rural communities.

The decision was unanimous, and it substantiates a warning from an FCC commissioner who declared the 2008 ruling “unlawful,” as Declan McCullagh reports for CNet:

Because the FCC “has failed to tie its assertion” of regulatory authority to any actual law enacted by Congress, the agency does not have the authority to regulate an Internet provider’s network management practices, wrote Judge David Tatel of the U.S. Court of Appeals for the D.C. Circuit.

Even though liberal advocacy groups had urged the FCC to take action against Comcast, the agency’s vote to proceed was a narrow 3-2, with the dissenting commissioners predicting at the time that it would not hold up in court. FCC Commissioner Robert McDowell, a Republican, said at the time that the FCC’s ruling was unlawful and the lack of legal authority “is sure to doom this order on appeal.”

Tuesday’s decision could doom one of the signature initiatives of current FCC Chairman Julius Genachowski, a Democrat. Last October, Genachowski announced plans to begin drafting a formal set of Net neutrality rules — even though Congress has not given the agency permission to begin. (Verizon Communications CEO Ivan Seidenberg, for instance, has said that new regulations would stifle innovative technologies like telemedicine.)

In fact, Democrats have been singularly uninterested in pursuing the kind of legislation that the FCC needs to extend its authority.  They certainly campaigned on the issue, and progressives expected action on it in this session of Congress.  Unfortunately, Democrats fumbled the health-care bill so badly that they probably have no time left to consider net neutrality, or for that matter, the stomach for another hard-Left agenda item before the midterm elections.

The lack of jurisdiction may also doom White House plans to dictate broadband expansion.  It doesn’t look promising, although the opinion by Tatel doesn’t appear to completely close the door on the notion.  He writes that the FCC has to show that its attempt to impose “ancillary authority” on a private company’s network-management practices derives from a “reasonably ancillary” part of its overall mandate.  The FCC and the Obama administration may find more solid ground in arguing that expansion of access is “reasonably ancillary” to the FCC’s mission of encouraging the broadest possible reach of American communication services.

This decision does make it clear that the courts are willing to act when executive-branch agencies attempt to arrogate authority and jurisdictions without Congress granting them in law.  That will be useful in this administration.

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