On September 25, the U.S. Court of Appeals heard oral arguments in the case of Minnesota Telecom Alliance v. FCC. The case involves several legal challenges against the FCC's November 2023 Digital Discrimination Order. One of those challenges is to the Order's imposition of unintentional disparate impact liability on broadband Internet service providers (ISPs). Section 60506 of the Infrastructure Investment and Jobs Act of 2021 authorizes the Commission to adopt rules prohibiting intentional digital discrimination of access to broadband Internet services based on one's membership in a protected class. However, the Order exceeds the agency's statutory authority by imposing unintentional disparate impact liability on ISPs.
The Free State Foundation's March 2023 public comments in the Commission's digital discrimination proceeding addressed the legal authority conferred on the Commission:
The text of the Infrastructure Act requires an intent-based definitional standard for digital discrimination. Section 60506(b) authorizes the Commission to adopt rules that prevent digital discrimination "based on" the specific categories of income level, race, ethnicity, religion, or natural origin. The Infrastructure Act's inclusion of the words "based on" in connection with suspect or prohibited classifications and – most significantly for purposes of statutory interpretation – the absence of any broader catchall terms such as "results in" or "otherwise adversely [a]ffects" indicates that proof of intent is a necessary element of any successful claim of "digital discrimination."
When Congress enacted the Infrastructure Act, it was aware of Supreme Court precedents regarding the use of such catchall terms. Yet Congress declined to include such catchall terminology in Section 60506.
Oral arguments before the 8th Circuit also addressed the claim that the Order's overreach upon overreach contravened the Supreme Court's Major Questions Doctrine. The Free State Foundation's April 2023 reply comments concluded that the FCC's expansive interpretation of Section 6506 – including the imposition of disparate impact liability, in particular – makes it likely that the order would run afoul of the Major Questions Doctrine. According to the Supreme Court’s decisions in West Virginia v. EPA (2023) and Biden v. Nebraska (2023), there are certain "extraordinary cases" involving decisions of such "political and economic significance" that a "clear congressional authorization" by Congress is required for the agency to exercise the powers it claims. However, Section 60506 does not contain clear congressional authorization authorizing the FCC to subject seemingly every facet of broadband ISPs business and deployments to unintentional disparate impact liability.
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