Legal Challenge Seen Likely if FCC Approves Tough Privacy Rules
A legal challenge appears all but certain if, as expected, the FCC enacts privacy rules for ISPs, lawyers on both sides of the debate told us. In numerous filings, industry groups and companies repeatedly said the rules violate the law. Lawyers said Chairman Tom Wheeler likely expects the agency to be sued and that hasn't stopped him from acting on other similarly tough issues.
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Lawyers said if the rules hamper the ability of ISPs to compete with edge providers in the huge and growing online advertising space, that adds to the inevitably of a challenge. Wheeler said last week approval of rules is critical, especially given Verizon’s proposed buy of Yahoo with its online advertising assets (see 1608040051).
“The FCC is constantly threatened to be sued … by people that they attempt to regulate,” said Dallas Harris, policy fellow at Public Knowledge. “That is absolutely no reason that the commission shouldn’t continue to do its job that they’re legally mandated to do, that’s to impose to these privacy rules. We think it’s great that Chairman Wheeler has his eyes on the prize and understands that his obligation is to approve these rules and not worry so much about these litigation threats.” The FCC faces similar threats on a “daily” basis, Harris said.
Frontier, CenturyLink and the ITTA were the latest to say the rules raise “myriad significant legal” issues. ITTA reported on a meeting with Wireline Bureau officials. “As far as the NPRM’s legal infirmities, we discussed how neither Section 222 of the Communications Act of 1934, as amended, nor any other provision of the Act, provides authority for the Commission’s proposed measures,” said the filing posted Wednesday in docket 16-106.
If the commission goes forward with the proposals in the rulemaking notice, “a legal challenge is virtually inevitable,” Michael Jacobs, ITTA vice president-regulatory affairs, told us.
“I think a legal battle is inevitable, especially as companies like Verizon diversify away from pure ISP services and into edge services,” said Daniel Lyons, associate professor of law at Boston College Law School. “There are bigger issues at stake than simply the future of the ISP business case. From an administrative law perspective, I'm intrigued by the clash between the FCC and the more-permissible FTC regime that governs the rest of the internet ecosystem.”
The FCC may find itself on shaky legal ground, said Randolph May, president of the Free State Foundation and former FCC associate general counsel. "The FCC’s proposal, if adopted, once again is quite a reach in terms of testing the limits of the FCC’s legal authority, even assuming that the Title II classification determination is upheld on further review,” May emailed. “The FCC’s interpretation of its privacy authority goes beyond the literal language and natural reading of the Communications Act. So the Commission will be relying on a combination of the ol’ 'virtuous cycle' theory coupled with Chevron deference to prevail.” FTC comments (see 1605270057) criticizing FCC reasoning “could prove decisive in a court finding that the agency’s action is arbitrary and capricious” under the Administrative Procedure Act, May said.
If the rules don’t allow some advertising by ISPs “there will surely be” a challenge on First Amendment grounds and if the rules closely track the NPRM, that challenge may well be successful, said a lawyer who represents ISPs on privacy issues.