Comcast v. FCC No. 08-1291

Quite interesting ruling from the United States Court of Appeals
For The District of Columbia Circuit. The FCC argued that it had authority to regulate a specific service provided by Comcast on its network based not on an express delegation of power, but on its ability to claim ‘ancillary jurisdiction’. The FCCs claim for ancillary jurisdiction is based on 47 U.S.C. § 154(i), which states that the Commission may “perform any and all acts, make
such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the
execution of its functions.”

However, the appeals court dissects that claim, by first noting that:

Indeed, in its still-binding 2002 Cable
Modem Order, the Commission ruled that cable Internet
service is neither a “telecommunications service” covered by
Title II of the Communications Act nor a “cable service”
covered by Title VI. (p. 5)

The court also has a test that can be use to determine whether ancillary authority may be invoked:

“The Commission . . . may exercise ancillary
jurisdiction only when two conditions are satisfied: (1) the
Commission’s general jurisdictional grant under Title I [of the
Communications Act] covers the regulated subject and (2) the
regulations are reasonably ancillary to the Commission’s
effective performance of its statutorily mandated
responsibilities.” (p. 8)

The court makes it clear that ancillary authority does not mean unrestricted authority:

“Though afforded wide latitude in its supervision over
communication by wire,” the Court added, “the Commission
was not delegated unrestrained authority.” (p. 21)

It is important to note that statement of Congressional policy alone does equate to a proper delegation of authority:

Instead, the Commission maintains that congressional
policy by itself creates “statutorily mandated responsibilities”
sufficient to support the exercise of section 4(i) ancillary
authority. Not only is this argument flatly inconsistent with
Southwestern Cable, Midwest Video I, Midwest Video II, and
NARUC II, but if accepted it would virtually free the
Commission from its congressional tether. (p. 23)

Finally, the court makes clear that the Commission has broad authority to regulate, but that this authority is not unrestricted:

It is true that “Congress gave the [Commission] broad
and adaptable jurisdiction so that it can keep pace with rapidly
evolving communications technologies.” Resp’t’s Br. 19. It
is also true that “[t]he Internet is such a technology,” id.,
indeed, “arguably the most important innovation in
communications in a generation,” id. at 30. Yet
notwithstanding the “difficult regulatory problem of rapid
technological change” posed by the communications industry,
“the allowance of wide latitude in the exercise of delegated
powers is not the equivalent of untrammeled freedom to
regulate activities over which the statute fails to confer . . .
Commission authority.” NARUC II, 533 F.2d at 618 (internal
quotation marks and footnote omitted). Because the
Commission has failed to tie its assertion of ancillary
authority over Comcast’s Internet service to any “statutorily
mandated responsibility,” Am. Library, 406 F.3d at 692, we
grant the petition for review and vacate the Order. (p. 36)

I think the court is right, however the consequences are a bit unnerving, as it makes the Internet a ‘private’ space in which corporations can set the rules as they seem fit. So they could regulate away free speech, right to privacy or protection against unreasonable searches and the like, it is their network, after all.

I’d say Congress needs to act urgently on that and close that regulatory gap.

The good news is that the Federal Reserve Board may also take note that wide latitude given to an agency – which the Board is, while the Federal Reserve Banks are not – does not mean ‘independence’ from the lawmakers, i.e. Congress.

The New York Times runs this story as well.