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Congressional Review Act Wrong Way to Legislate on Net Neutrality

On Wednesday, May 16, the Senate is expected to vote on a Congressional Review Act (CRA) resolution of disapproval that purports to undo the Federal Communications Commission’s Restoring Internet Freedom order. The order, approved by the FCC in December 2017, reversed the agency’s earlier decision in 2015 to regulate Internet service providers like public utilities under Title II of the Communications Act, a federal law originally enacted in 1934 to govern the old Ma Bell telephone monopoly.

To date, precisely half of the U.S. Senate—49 members of the Senate Democratic caucus plus Sen. Susan Collins (R-ME)—have expressed support for the CRA resolution. Even if it passes the Senate, however, it won’t go into effect unless the House of Representatives also approves the resolution and the president signs it into law. In the highly unlikely event that all of this happens, proponents of the resolution claim that it will “restore net neutrality rules” that the FCC’s 2015 order had imposed on broadband providers.

As my CEI colleagues and I have explained on these pages ad nauseam, net neutrality regulation is harmful, unnecessary, and unconstitutional. Handicapping Internet providers’ ability to experiment with business models that entail differential treatment for varying types of Internet traffic will only hurt broadband competition. Barring Internet providers from partnering with content companies such as Netflix or Amazon to prioritize certain traffic in the name of “equality” and “fairness” just means that consumers will end up bearing the full cost of improving the last mile that connects our homes and devices to the global Internet. I co-wrote a paper a year ago explaining all this in greater detail.

But the CRA resolution up for a vote on May 16 has implications that go well beyond net neutrality, a principle that even several prominent Republican lawmakers now wish to enshrine in legislation—which, by the way, amounts to “snatching defeat from the jaws of victory,” as my colleague Jessica Melugin recently warned. If a CRA resolution that disapproves of a particular rule is enacted, it forbids the agency from reissuing that rule in “substantially the same form.” Therefore, if the CRA resolution targeting the FCC’s Restoring Internet Freedom order passes, it may end up forcing the FCC to regulate Internet providers like telephone utilities indefinitely, at least until Congress rewrites the Communications Act.

Utility-style regulation is not merely about net neutrality—in fact, it’s far from clear if the FCC is even allowed to mandate neutrality under Title II of the Communications Act, as veteran telecom attorney and former FCC staffer Lawrence Spiwak has explained. Rather, utility-style regulation is, at its core, about price controls, a reality that Senate Minority Leader Chuck Schumer alluded to in recent remarks in which he argued that the government must ensure that Internet providers don’t charge too much for their services. Few public policies would do more to undermine investment and innovation on the Internet than bureaucrats dictating the prices that broadband companies must charge for their services. Indeed, if history is any indication, price controls may well result in higher prices for Internet users in the long run.

Unfortunately for supporters of the CRA resolution, it’s questionable if it will even accomplish its objective of forcing the FCC to revert to its 2015 regulatory regime. That’s because the Congressional Review Act provides a mechanism for Congress to disapprove of rules, as opposed to all agency decisions issued under the Administrative Procedure Act. In issuing the Restoring Internet Freedom order in 2017, the FCC adopted a revised version of a previous rule regarding Internet service provider transparency—but the core of the 2017 order entailed a reinterpretation of the meaning of the term “telecommunications service.” Whereas the FCC’s 2015 order concluded that this term includes Internet service providers, the 2017 order concluded just the opposite: that Internet providers do not offer telecommunications services, but instead offer “information services”—which, unlike telecommunications services, are not subject to utility-style regulation under the Communications Act. As TechFreedom explained in a letter to congressional leadership this week, and as the American Action Forum’s Will Rinehart discussed in an essay last month, the CRA does not apply to declaratory orders issued by administrative agencies. The upshot is that even if the CRA resolution is enacted, a plausible outcome is that it will merely eliminate the revised transparency rule without altering the FCC’s decision not to treat Internet service providers like telecom utilities.

Ultimately, Congress needs to enact legislation that strips the FCC of the authority to regulate the Internet by clarifying that Internet service providers are not telecommunications services. Ideally, such a bill would not grant the FCC—or, for that matter, any other regulator—new authority to regulate Internet companies. But if members of Congress insist that the FCC regulate Internet providers under Title II of the Communications Act, the CRA is not the right procedure to achieve this outcome, however ill-conceived it may be.