Judges weigh a make-or-break case against heavy Web regulation.
For the first 20 years of the Internet, entrepreneurs were free to focus on their computer code that changed everyone’s life. Now regulators are forcing technologists to cope with a different kind of code—the legal system. Unlike the disciplined operation of digital software, the legal code depends on human willingness to obey its rules.
This month the federal appeals court in Washington heard make-or-break arguments against new regulations micromanaging the Internet. The rules issued earlier this year for the first time gave bureaucrats power to block new Internet products, services, pricing and technologies.
These regulations violate the bipartisan congressional consensus retained since the Clinton administration to keep the Internet free of regulation. Ever since the Telecommunications Act of 1996, congressional policy has been to “preserve the vibrant and competitive free market” for the Internet “unfettered by federal or state regulation.”
Federal judges are now deciding what to do about the Obama administration’s scheme to get around Congress by pressuring the supposedly independent Federal Communications Commission to fetter the Internet through regulations designed more than a century ago for railroads and the telephone monopoly.
The three-judge appeals panel included David Tatel, a Clinton appointee whose legal opinions blocked the FCC’s earlier Internet regulations. During the oral argument, he demanded to know why the agency in February suddenly opted to regulate the Internet as a utility instead of pursuing the lighter regulatory approach the agency had called its “blueprint.”
Judge Tatel tried asking the FCC’s lawyer this key question three times:
“The commission even called it the ‘blueprint’ offered by the D.C. Circuit. That’s the commission’s word, not mine. And so what, how do you describe the commission’s reasons for abandoning that approach. What’s the policy explanation for that decision?”
When Judge Tatel got no answer, he tried again: “What changed [the commission’s] mind? It couldn’t have been changed circumstances, right? The circumstances are all essentially the same. What is the crispest answer?”
After another evasive answer, Judge Tatel said, “It couldn’t have been changed facts. Right? It had to be a different perception of what was happening. What was that?”
And finally: “What drove the commission?”
Everyone in the courtroom knew why the FCC’s lawyer wouldn’t answer with the truth: What “drove” the agency was the politically motivated demand by the Obama White House that the agency submit the Internet to the heavy-handed regulations now known as Obamanet.
This pressure included a video by President Obama and organized demonstrations outside the home of Tom Wheeler, the FCC chairman. Mr. Wheeler sent an email to his staff, later obtained by a congressional committee, expressing shock over strong-arming by the White House. A page-one article in The Wall Street Journal detailed how administration staffers dictated policy to the agency.
This political interference is clear abuse by the executive branch. The independent regulatory agencies created during the New Deal have a precarious constitutionality even without a president dictating orders. The Constitution says only Congress can make laws. The separation-of-powers justification for “independent” agencies’ issuing rules assumes that apolitical experts run agencies without pressure from the White House, and that they craft careful factual records before regulating. With Obamanet, the FCC failed these tests.
Judge Tatel himself warned against politicized agencies in a speech on administrative law published in 2009 in the Harvard Environmental Law Review. “It looks for all the world like agencies choose their policy first and then later seem to defend its legality,” he wrote. That “entirely backwards” approach, he added, “effectively severs the tie between federal law and administrative policy, thus undermining important democratic and constitutional values.”
Judges are hard to predict, so there is no guarantee that the appeals court, when it rules, will have the courage of Judge Tatel’s conviction that agencies must operate independently. But by overturning the Obamanet regulations, judges would protect both the law and the Internet.
This month the FCC sent letters to T-Mobile, AT&T and Comcast demanding that they appear before agency staff by Jan. 15 to justify new pricing plans. These offer cost-conscious consumers data programs with unlimited, so-called “zero rating,” access to selected services such as video and music. Net neutrality absolutists oppose these plans even though the offerings create more consumer choice.
Only last month, Mr. Wheeler praised as “innovative” the T-Mobile pricing plan his agency now challenges. He even chided critics for predicting that innovators would have to plead, “Mother, may I?” with the FCC. The agency now demands that companies beg for regulatory approval. Republican FCC commissioner Ajit Pai said the agency should not “haul in companies left and right,” warning that “the era of permissionless innovation is over.”
The appeals court will rule on the case in early 2016. Invalidating Obamanet would uphold the understanding shared by Silicon Valley and Congress that innovation, not regulation, drives the success of the Internet.