Changing Rules Opposed by FCC Republicans No Slam Dunk in Some Cases

ISP privacy rules and the 2015 net neutrality order, which included the reclassification of broadband as a Title II service, are examples of the different approach a Donald Trump FCC would have to follow on different orders, industry lawyers said. Most ISP privacy rules haven’t taken effect and as a result will be relatively easy to undo, though a few provisions kick in this month (see 1612120055). Under the rarely used Congressional Review Act of 1996, Congress has 60 legislative days after a regulation is published to vote to disapprove it.

But net neutrality rules, approved through a lengthy rulemaking proceeding, that started with a May 2014 NPRM and wrapped up with an order released in March 2015, will be tougher to unravel, some officials said.

Regulations that haven’t been published by Jan. 20 likely will be pulled back immediately, said Susan Dudley, director of the Regulatory Studies Center at George Washington University. One of the expected first actions of new White House Chief of Staff Reince Priebus is to issue a memo to all agencies “directing them not to send regulations to the Federal Register until they are approved by incoming policy officials, and to retrieve from the Federal Register all regulations not yet published,” Dudley said in a blog post.

In other cases, agencies will have to do a rulemaking following steps governed by the Administrative Procedure Act of 1946, Dudley said. These include “developing a legal record justifying the proposed change (including technical and economic analysis), and seeking public comment on that record and the proposed regulatory (deregulatory) action,” she said. “The agency would have to respond to public comment, which may lead to modifications to the draft regulation, before it issues a final rule. These steps generally take at least a year, but the story won’t likely end there.” Once the final rule is issued, two records will exist, with “one developed to support the original regulation and a second that supports its elimination or modification,” Dudley said. “The revised rule will almost certainly be litigated, with parties that supported the original rule pointing to the earlier record to defend their objections. This legal process may take years to resolve.”

The timeline for reversing “some of the more injurious regulations” approved under Wheeler will vary depending on the circumstances, said Randolph May, president of the Free State Foundation and former FCC associate general counsel. “Assuming that Congress doesn’t act first, there is a difference between the commission’s ability to jettison the privacy rules, which haven’t yet become effective, and the net neutrality rules which have,” May told us. “I think it’s possible for the Republican majority to just pull back the privacy rules before they become effective. The commission most likely will be required to engage in a rulemaking to curtail the already-effective net neutrality rules, and, realistically, that could take six to 12 months to complete if done properly.” The FCC must explain carefully its reason for acting “because it’s virtually certain that curtailment of the restrictions will be challenged in court.” But aspects of the net neutrality regulation will get immediate change Jan. 20, May said. “For example, the Republican commissioners have made clear that they have no intention of pursuing the zero-rating investigations that Wheeler initiated,” he said.

"There are many options in front of the FCC for repealing the Title II order,” said Robert McDowell, former FCC commissioner now at Cooley. The commission could announce that it simply won't enforce the order, he said. “But that begs the question of what rules would apply. All market players in the internet ecosphere will want to know what the ground rules are, so the FCC may give an indication of what it views as acceptable behavior.” McDowell said Republican Commissioners Ajit Pai and Mike O'Rielly did that in part with their letter saying they won’t hold small ISPs responsible for not following enhanced transparency requirements that kick in Jan. 17 (see 1612190059).

Providing certainty “could be as simple as restating the 2005 principles adopted unanimously and on a bipartisan basis under Chairman [Michael] Powell,” McDowell said. “After that, the commission could start a new rulemaking process, which could take the better part of a year. While the commission is doing its work, Congress is likely to kick-start its own process to codify a win-win-win solution that could bring certainty to the market and which could also benefit the edge, network operators and consumers to put to rest this 12-year-old debate."

Republicans Blustering?

“The bluster from Commissioners Pai and O’Rielly about quickly dismantling well-supported rules is just that, bluster,” said Matt Wood, Free Press policy director. “That’s true no matter how many industry cheerleaders they have lined up and egging them on. Also overblown is the notion that Congress can quickly push things through. The consummate insiders and industry re-treads that Trump’s bringing in may come to find that, no matter how many lobbyists they hire, it’s hard to destroy internet user protections that have such overwhelming bipartisan support outside of the Beltway.”

TechFreedom President Berin Szoka questioned whether the FCC will have to do another lengthy rulemaking to make substantial changes to the net neutrality rules. “All the FCC has to do is overturn the underlying claims of legal authority: Title II and Section 706” of the Communications Act, Szoka emailed. “That can be done by issuing an order saying that broadband is not a telecommunications service, and that Section 706 is not an independent grant of authority. That will leave no legal authority for the Open Internet Order, thus nullifying the order.” The FCC would then be issuing an “interpretive, rather than a substantive rule, and the [Administrative Procedure Act] notice-and-comment requirement applies only to substantive rules,” Szoka said.

“If the FCC takes longer to schedule a vote on order, it will be because Pai wants to take advantage of the resources of the general counsel's office once he becomes chairman to write an order that even more thoroughly explains why Congress did not intend Title II to apply to broadband,” Szoka said. Pai is widely expected to be named chairman by Trump (see 1612160037). “In the interim, the FCC can simply forbear, sua sponte [of its own accord], from enforcing any of the provisions of the Open Internet Order, and any other provision of Title II.” The Republican-dominated FCC “would simply be following the path blazed by Tom Wheeler,” he said. “The 2015 Open Internet Order hinges on the argument that the FCC can change its mind whenever it wants about interpreting the Communications Act -- and can forbear just as freely.”

Pai and Chief of Staff Matthew Berry are "artists not vandals,” said Adonis Hoffman, chairman of Business in the Public Interest and former aide to Commissioner Mignon Clyburn. “We should expect the changes to be effected by the scalpel and not the sword. They will carefully insert new language into existing regulations, rather than tearing down existing structures."

How long it will take the FCC, or Congress, to reverse parts of the net neutrality and other orders is hard to predict, said Scott Cleland, chairman of NetCompetition. “What matters most and is very predictable timing-wise is that shortly after Jan. 20 the FCC’s going-forward vision and approach will flip from an exceptionally regulatory trajectory to a purposefully deregulatory trajectory, and just as important, the FCC’s enforcement process will flip from the current subjective, make-it-up-as-you-go-along, internet general conduct standard, to an objective, knowable and due-process driven enforcement process,” Cleland said.