The net neutrality roadblock: Now only Congress can act

"Subject matter jurisdiction"

Back in 2005, the FCC was defending its right to enforce rules regarding the use of the broadcast flag -- the little signal attached to a digital broadcast that would disable anyone from recording the broadcast. After a challenge from the American Library Association, the DC Circuit made perhaps the first-ever ruling establishing, word for word, just what the FCC's "ancillary authority" meant: "The Commission...may exercise ancillary jurisdiction only when two conditions are satisfied: (1) the Commission's general jurisdictional grant under Title I [of the Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission's effective performance of its statutorily mandated responsibilities."

Meaning, the FCC could do what's necessary with regard to regulating certain other media, in order to protect the interests of the media it already covers. That ruling introduced new language: "the regulated subject." In its defense of regulating how Comcast polices its Internet traffic, the FCC maintained that, by virtue of the fact that communications do take place over the Internet, and "Communications" is the FCC's middle name, it therefore has subject matter jurisdiction over Internet matters. It's that same language that the FCC uses to defend its authority to introduce the six principles, and the basis of its national Broadband Plan.

The problem with the concept of subject matter jurisdiction, courts including the DC Circuit have warned, is that it can be used as a kind of rubber stamp, to assume that simply because a circumstance applies to X, it can or must also apply to Y. The Supreme Court, by setting the case-by-case precedent in the two Midwest Video cases, clearly showed no such rubber stamp existed. And thus when the FCC itself tried to use the Midwest cases in its own assertions that ancillary authority can apply, it opened the door for the DC Circuit to demonstrate that it does not always apply.

Here is where it all comes back to what Congress failed to do in 2006: Anything that does not fall under the "ancillary" category of the FCC's authority, the DC Circuit said, must be explicitly scoped out for it by Congress. Anything ancillary thus becomes authority assumed for the sake of preserving what's already scoped out. You can't use "subject matter" to assume something outside that scope.

In Midwest Video II, the Supreme Court rejected the Commission's assertion of ancillary authority to impose a public access requirement on certain cable channels because doing so would "relegate cable systems . . . to common carrier status."...Pointing out that the Communications Act expressly prohibits common carrier regulation of broadcasters...the Court held that given the derivative nature of ancillary jurisdiction the same prohibition applied to the Commission's regulation of cable providers. The Commission had opposed this logic, arguing that it could regulate "so long as the rules promote statutory objectives." The Court rejected that broad claim and, revealing the flaw in the argument the Commission makes here, emphasized that "without reference to the provisions of the Act directly governing broadcasting, the Commission's [ancillary] jurisdiction . . . would be unbounded."..."Though afforded wide latitude in its supervision over communication by wire," the Court added, "the Commission was not delegated unrestrained authority."

The teaching of Southwestern Cable, Midwest Video I, Midwest Video II, and [other cases] -- that policy statements alone cannot provide the basis for the Commission's exercise of ancillary authority -- derives from the "axiomatic" principle that "administrative agencies may [act] only pursuant to authority delegated to them by Congress."...Policy statements are just that -- statements of policy. They are not delegations of regulatory authority. To be sure, statements of congressional policy can help delineate the contours of statutory authority. Consider, for example, the various services over which the Commission enjoys express statutory authority. When exercising its Title II authority to set "just and reasonable" rates for phone service...or its Title III authority to grant broadcasting licenses in the "public convenience, interest, or necessity"...or its Title VI authority to prohibit "unfair methods of competition" by cable operators that limit consumer access to certain types of television programming...the Commission must bear in mind section 1's objective of "Nation-wide . . . wire and radio communication service . . . at reasonable charges."...In all three examples, section 1's policy goal undoubtedly illuminates the scope of the "authority delegated to [the Commission] by Congress"...though it is Titles II, III, and VI that do the delegating. So too with respect to the Commission's section 4(i) ancillary authority. Although policy statements may illuminate that authority, it is Title II, III, or VI to which the authority must ultimately be ancillary.

Congress had planned to leave it up to the FCC to set the stage for the direction of broadband regulation for this century, and then to follow its lead. Those plans have now been blown to smithereens. Although the Supreme Court still trumps the DC Circuit, there's very little chance the John Roberts court would overturn this ruling.

What this ruling effectively means is that the regulatory body that mandates the absolute neutrality of the use of the Internet does not exist...Not yet.