Court Hears Arguments on Challenges to FCC's New Title II Order

On October 31, the U.S. Court of Appeals for the Sixth Circuit heard oral arguments in case MCP No. 185 Open Internet Rule. The case consolidates several legal challenges against the FCC's April 2024 Securing and Safeguarding the Open Internet Order. The Commission's order turned broadband Internet access services into a public utility and subjected broadband Internet service providers (ISPs) to rate regulation.

By an August 1, 2024, order, a three-judge panel of the Sixth Circuit stayed the Commission's order pending resolution of legal merits of challenges to that order. The court's decision to stay the agency's order was discussed in an August 23 Perspectives from FSF Scholars by FSF President Randolph May, "The Sixth Circuit Stays the FCC's Latest Net Neutrality Flip-Flop." A different panel was designated to decide the legal merits.

 

Oral arguments before the three-judge merits panel lasted approximately one hour. Judge Raymond M. Kethledge pressed legal counsel on the meaning of statutory terms – such as "information services" under Title I of the Communications and "telecommunications services" under Title II. Other judges expressed greater interest in the "major questions doctrine." They pointedly asked if the "major questions doctrine" is still operative following the Supreme Court's decision in Loper-Bright v. Raimondo and whether reclassifying broadband Internet access services under Title II and subjecting it to public utility regulation and rate controls amounts to a matter of economic and political significance under the "major questions doctrine." 

 

The Free State Foundation's 2017 initial comments and reply comments in the FCC's Restoring Internet Freedom proceeding emphasized the statutory definitional case for why broadband Internet access services are Title I "information services." 

 

Moreover, FSF's 2023 initial comments and reply comments in the Safeguarding and Securing the Open Internet proceeding explained why reclassifying broadband Internet access services under Title II and thereby subjecting those services to a public utility regime with rate regulation triggers the "major questions doctrine." That is, turning broadband ISPs into public utilities and asserting control over their rates is a politically and economically significant matter. Congress nowhere provided the FCC clear authority to make such a momentous decision. 

 

The Sixth Circuit panel that issued the August 2024 stay decision in the MCP No. 185 Open Internet Rule concluded that the FCC's order likely violated the "major questions doctrine." But the Sixth Circuit's merits panel that just held oral arguments will offer its view in due time. The judges will more comprehensively answer the disputed questions about the Commission’s authority.

Court Hears Arguments on Challenges to FCC's Digital Discrimination Order

On September 25, the U.S. Court of Appeals for the Eighth Circuit 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 Eighth 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. 

Media Advisory - FSF Files Comments on FCC's Propose Rules for AI Generated Content in Political Ads

Media Advisory

September 19, 2024

Contact: info@freestatefoundation.org

Free State Foundation President Randolph May and Seth Cooper, Director of Policy Studies and Senior Fellow, submitted comments today in the Federal Communications Commission’s proceeding proposing to require radio and TV broadcasters as well as cable and direct broadcast satellite (DBS) operators to include a disclaimer on all political ads that contain content generated by artificial intelligence (AI). These comments demonstrate that the Commission lacks statutory authority to adopt its proposed regulation of the content of political ads using AI and that, in any event, it would constitute unsound policy to do so.

The complete set of the Free State Foundation comments, with footnotes, is here.

 

Immediately below are the "Introduction and Summary" to the comments, without the footnotes.

Introduction and Summary

These comments are submitted in response to the Commission’s Notice proposing to require radio and TV broadcasters as well as cable and direct broadcast satellite (DBS) operators to include a disclaimer on all political ads that contain content generated by artificial intelligence (AI). They also would be required to include a notice in their online political files disclosing the ad’s use of AI. The Commission’s rush to adopt a novel AI political ad regulation is a misguided power grab – a combination of bad law and bad policy. The Commission should not adopt the proposed rule.

 

The agency lacks statutory authority for its proposed regulation of the content of political ads using AI. The Notice of Proposed Rulemaking cites Section 303(r) and other provisions of Title III of the Communications Act regarding the agency’s power to make rules and regulations necessary to carry out the Act’s provisions in the “public interest.” But the Commission has no traditional regulatory authority over the content of political ads on broadcast radio or TV, and none of those provisions cited in the Notice contain language that reasonably may be interpreted to authorize disclaimer and disclosure mandates for political ads featuring AI-generated content.

Moreover, the FCC’s proposal is likely to run afoul of the Major Questions Doctrine (MQD) as articulated in West Virginia v. EPA (2022) because it involves a question of “vast economic and political significance.” Proposing for the first time to regulate the use of AI in connection with political advertisements appears to be a paradigmatic case meeting the MQD criteria. As such, and because Congress has not clearly granted the FCC authority to adopt the rule it proposes, it’s very unlikely to survive judicial review.

 

By contrast, the Federal Elections Commission (FEC) is given much more explicit statutory authority to regulate significant aspects of political campaign ads under the Federal Election Campaign Act. This includes the FEC’s “exclusive jurisdiction with respect to the civil enforcement” of the Act. To date, however, the FEC has never determined it has jurisdiction to regulate political ads with AI-generated content under its “materially deceptive” statute – and the FEC may lack such authority. If the FEC lacks authority to regulate political ads with AI-generated content, then a fortiori the FCC certainly lacks similar authority under Communications Act provisions regarding broadcast, cable, and satellite services. 

Even if the FCC had the requisite legal authority, the proposal constitutes bad policy because it would apply to ads with AI-generated content that are not materially deceptive, likely causing many viewers to distrust the ads solely or primarily because of the boilerplate disclaimer or simply to “tune out” the disclaimers. Also, it would apply only to ads that are broadcast or transmitted by FCC-regulated services – and not by Internet outlets that garner an increasing share of political ads. Requiring disclaimers on ads shown by broadcast, cable, and satellite services when those same ads may be posted online to wider audiences without disclaimers will add to the confusion, especially since materially deceptive ads are more likely to appear online. Moreover, broadcasters (and cable and DBS operators) do not have inside knowledge about how given political ads were created; yet under the proposed regulation, apparently they would shoulder the burden of having to discern when generative AI was used. By focusing on broadcasters of political ads rather than the creators, the proposed regulation deviates from a more reasonable focus on ad creators that is taken in many nascent state laws regulating the use of AI in elections.

 

Additionally, the proposal would put the Commission in the untenable position of making judgments about “credible third parties” who raise complaints about ads, a matter in which the agency has no expertise. Government should not assume any role in designating third parties as “credible” or not credible for purposes of deciding whether political ads should be disclaimed, disclosed, or taken down. If it were to do so, it would inevitably, and justifiably, invite suspicion that its decisions are politically motivated. The proposed overly broad definition of “AI-generated content” likely would result in broadcast, cable, and satellite services requiring disclaimers for all or nearly all political ads as a regulatory risk aversion measure, rendering such disclaimers unhelpful, if not meaningless.

A PDF of the complete set of Free State Foundation comments, with footnotes, is here.

Oral Arguments on FCC's New Title II Order Set for End of October

According to news reports, the U.S. Court of Appeals for the Sixth Circuit has scheduled October 31, 2024, as the date for oral arguments on the merits in the pending legal challenge to the FCC's Safeguarding and Securing the Open Internet Order. It is reported that live-streaming audio of the arguments will be available to the public. 

The Commission's order changed the classification of broadband Internet access services from a lightly regulated "information service" under Title I of the Communications Act to a more heavily regulated common carrier "telecommunications service" under Title II. Lawsuits challenging the new Title II order have been consolidated before the Sixth Circuit. 

 

In an August 23 Perspectives from FSF Scholars, "The Sixth Circuit Stays the FCC’s Latest Net Neutrality Flip-Flop," Free State Foundation President Randolph May reviewed the court's per curiam order released August 1. That court order stays the Commission's order, pending a decision by the merits panel assigned to the case. FSF President May briefly analyzes the major questions doctrine (MQD) rationale for the court's stay order and Chief Judge Jeffrey Sutton's concurring opinion that addresses the best reading of the Communications Act. Both issues can be expected to receive more extensive judicial analysis by the Sixth Circuit's merits panel. 

 

For more on the new Title II Order and the MQD, see my April 2024 Perspectives from FSF Scholars, "The FCC's Internet Regulation Plan Fails the Major Questions Doctrine."

Press Release: The FCC Should Turn to Productive Endeavors

Regarding the Sixth Circuit’s issuance of an order staying implementing of the FCC decision to regulate Internet service providers as common carriers, Free State Foundation President Randolph May issued the following statement:

“Not since Daniel read the proverbial handwriting on the wall to King Belshazzar have predictions of doom been a safer bet. From the initiation of the FCC’s proceeding to regulate Internet service providers as common carriers, it’s been clear that the FCC’s action likely would be held unlawful as exceeding the agency’s authority. While the Sixth Circuit’s action is not a final determination, here’s today’s prediction. If the FCC pursues this case to the Supreme Court, it will lose because the Court has already telegraphed, in West Virginia v. EPA, that whether the FCC may regulate Internet providers as common carriers is a Major Question —and one that Congress has not clearly authorized the FCC to decide. In other words, the handwriting is on the wall, and you don’t have to be Daniel to read it.

“It would be so much better for America’s consumers if the Commission and the Biden Administration would turn away from the pursuit of fruitless aggressive regulatory endeavors, such as those pursued in the now-stayed Title II proceeding and the Digital Discrimination proceeding, and focus their energies on policies that would speed deployment to those still waiting for the remaining broadband deployment gaps to be filled."