Opponents of net neutrality, including the Competitive Enterprise Institute, have pointed to numerous grounds upon which the detrimental scheme could be challenged. These include its deterrent effect on investment, its unsatisfactory grounding in FCC statutory authority, and that it violates the First Amendment.
Via the Free State Foundation's outstanding Perspectives series, a forthcoming paper from Boston College Law Professor Daniel Lyons offers an even stronger basis for challenge: The Fifth Amendment. Under Prof. Lyons’s theory, net neutrality would run afoul of eminent domain. It would constitute a regulatory taking, requiring just compensation.
Under Supreme Court precedent, any governmental regulation that results in “permanent, physical occupation” of private property constitutes a per se taking. This is true even where the government itself is not doing the occupying. If the government grants access to other parties to freely traipse across private property, it’s still a taking. In effect, the government has forced one party to give a permanent easement to another party, destroying the first’s “right to exclude.”
This applies in the net neutrality context. Instead of allowing broadband providers to dictate terms of service and variable pricing models based on demand, the providers would be forced to allow content creators unlimited access to their networks. In essence, “content providers would receive the equivalent of a virtual easement to traverse broadband providers’ networks.” If it’s a compensable taking for the government to require cable lines to be installed, it’s also a taking for the government to require that those cable lines carry certain content.
And lest opponents start arguing “But it’s only electricity! That’s not what Court meant by physical.”, Prof. Lyons has a rebuttal:
As a factual matter, the transmission of content over broadband networks is not some metaphysical act. It takes place in a real physical space: the fiber-optic and copper wires, and associated electronics, that comprise the broadband network. Transmission of Internet content primarily involves the movement of electrons (which are physical particles) that occupy rivalrous limited space on telecommunications wires en route from the Internet to the end-user consumer. While the electrons are invisible to the naked eye and travel very quickly within a sheathed wire, the physical act of transmission is nothing more than a microscopic version of vehicles traveling along a highway—or pedestrians traversing an easement. In other words, the mandatory transmissions do physically occupy the service providers' property.
Lyons goes on to describe how the FCC lacks the constitutional authority to authorize such a taking. A Title II reclassification could thus be void from Day 1. Only Congress can take this action, if action is taken at all. But if Congress acts, they should understand that the regulation will come with a multimillion dollar price tag in legal fees and compensation payouts from the Treasury. That's not smart policy -- jeopardizing taxpayer dollars for a scheme that was ill-conceived from the very beginning.