With the elevation of Justice Neil Gorsuch to the Supreme Court there has been a renewed focus, particularly within libertarian and limited government legal circles, on the problem of overreaching administrative agencies and the need for more stringent judicial review of agency action. Most of this attention has been focused on the doctrine known as Chevron deference, which holds that when a statute is ambiguous then a court must defer to an administrative agencies interpretation of that statute. While still serving as a circuit judge, Gorsuch wrote in a now famous (at least within the world of admin law experts and libertarian lawyers) concurring opinion in which he denounced Chevron for “permit[ing] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design.” Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1149 (10th Cir. 2016). There is now a whole sub-movement with the conservative/libertarian legal movement that believes that now is the time to strike at the administrative state, and that Chevron will be the first domino to fall. While I share this concern about Chevron and administrative power, I think that there is a better place to start the war on the administrative state: The Federal Communications Commission’s Forbearance power.
America’s telecommunications industry, and the FCC, is governed, by and large, by the Communications Act of 1934. If you think it is absurd that the tech sector, which evolves and reinvents itself on a constant basis, is subject to laws written over 80 years ago (and the countless regulations that the FCC has promulgated under those laws during that time) you would not be alone. The last time that Congress passed a major amendment to this area of the law was with the Telecommunications Act of 1996. Of course, by tech standards, this is still positively ancient, an era when AOL floppy disks still roamed the earth. While the Telecom Act made some major changes to the law, the Communications Act was still left largely intact, even though most people recognized that it was highly problematic in the modern world, particularly when applied to the infant communications network known as the Internet.
Recognizing its failure to supply the nation with a viable set of laws governing a vital industry – but lacking the political will to actually fix the problem – Congress enacted Section 10 of the Telecommunications Act, codified at 47 U.S.C. § 160. The section created what is known as “forbearance authority,” authorizing the FCC to decline to enforce any statute, regulation, or rule if:
(1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;
(2) enforcement of such regulation or provision is not necessary for the protection of consumers; and
(3) forbearance from applying such provision or regulation is consistent with the public interest.
The FCC can apply its forbearance authority on a case by case basis based on individual applications, or it can declare on its own initiative that it will forbear from enforcing a statute or regulation across the board. Congress has given up all pretense of legislating communications policy and has delegated to the unelected FCC the power to write, amend, or repeal communications law as it sees fit. After looking at the tangled mess of the Communications Act, the Telecom Act, and six decades wroth of FCC regulations, Congress shrugged is collective shoulder and told the FCC, “You deal with it! If you think the laws we passed are good then enforce them, if you think the laws we passed are stupid then ignore them. We. Don’t. Care.”
On the one hand, to free marketeers who are skeptical of regulations this is a good thing. A good number of the laws and regulations overseen by the FCC are indeed stupid, unnecessary, and stifle innovation, so forbearance is a useful deregulatory tool. When taken in isolation, each time the FCC grants forbearance and declines to enforce a statute or regulation it is a small victory in the fight for limited government.
These small victories, however, are insignificant compared to the incredible power it concentrates into the hands of administrative officials. One of the central tenants of our Constitution is the separation of powers. The Constitution clearly states that “All legislative Powers herein granted shall be vested in a Congress of the United States. . ..” Art. I, § 1 (emphasis added). The President, on the other hand, is only vested with “executive Power” and “he shall take Care that the Laws be faithfully executed. . ..” Art. II, § 1 and § 3. Except for his power to sign or veto laws, the Constitution gives the President, and by extension the entire executive branch, no roll in creating, amending, and repealing legislation. The legislature enacts laws, the judiciary interprets laws, the executive enforces laws. We all learned this in junior high. The Congress cannot delegate to the executive the power to enact, amend, or repeal laws on its own.
Of course, most lawyers and government officials will tell you that this is an absurd and quaint notion, that expecting Congress to actually pass the rules that will govern us is unrealistic, and that executing the law inherently requires that the executive create rules and regulations about how it will enforce the law. While it is true that courts since the New Deal have given Congress significant freedom to empower agencies to make regulations, there are limits. The Supreme Court has held that Congress may not authorize an agency to make rules and regulations unless it first “lay[s] down by legislative act an intelligible principle to which [the agency] is directed to conform.” Whitman v. Am. Trucking Associations, 531 U.S. 457, 472 (2001) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928)).
It is certainly true that the Supreme Court has set the bar of the “intelligible principle” test very low, and that it has rarely ever struck down a delegation of authority to an agency. But where Congress delegates rulemaking authority but “provided literally no guidance for the exercise of discretion” or grants significant regulatory authority to an agency “on the basis of no more precise a standard than stimulating the economy by assuring ‘fair competition,’” the Court has not hesitated to uphold the nondelegation doctrine. Whitman, 531 U.S. at 474 (citing Panama Refining Co. v. Ryan, 293 U.S. 388 (1935); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)). Additionally, “the degree of agency discretion that is acceptable varies according to the scope of the power congressionally conferred.” Id. at 475. So, while Congress can provide essentially no guidance when delegating trivial matters, “it must provide substantial guidance on setting [] standards that affect the entire national economy.” Id.
The FCC’s forbearance authority seems unlikely to meet even the very low bar of the intelligible principles test. To being with, the scope of the power that Congress delegated to the FCC in 47 U.S.C. § 160 is staggering. It gives the FCC the authority to nullify almost every law that Congress has enacted to govern a major segment of the U.S. economy, and that has a major impact on essentially every aspect of American economic, political, and social life. Surely the delegation of power on this scope should require “substantial guidance” from Congress if it is to comply with the nondelegation doctrine. Yet the only guidance that Congress gives the FCC in deciding to nullify an Act of Congress is that: (1) service providers must act justly and reasonably; (2) the nullified laws must not be necessary for consumer protection; and (3) it must be in the public interest.
Justice, reasonableness, consumer protection, public interest. That is the extent of the guidance that Congress has given the FCC on how it should exercise its forbearance authority. Given that each of these is an abstract and subjective concept, it is difficult to see any intelligible principle at work here. Instead, it is an admission that, despite the enormous impact it has on our lives and wallets, Congress has no interest in legislating communications policy and that it is unconstitutionally abdicating its legislative power to the agency.
To see how problematic Congress’ decision to abdicate all legislative power regarding communications policy is one need look no further than the fight over Net Neutrality. I don’t intend here to make any comment on the wisdom of Net Neutrality as a matter of policy. Plenty of ink has already been spilled on that debate, and we can all rest assured that the moment a Democratic President appoints a Democratic majority to the FCC we will have that debate all over again. What I am talking about is the procedural maneuvering that went into the 2015 Protecting and Promoting the Open Internet Order (aka the Net Neutrality Order).
Without going too deep into the morass of communications law, broadband internet services providers were initially classified as “information services” rather than “telecommunication services.” While information services were only lightly regulated, telecommunication services were treated as common carriers under Title II of the Communications Act. Title II, which governs traditional land-line telephone services, is the regulatory equivalent of a hydrogen bomb. It is a raw, unadulterated form of pure regulatory power, and it is not known for its flexibility or its tolerance of innovation.
When the push for Net Neutrality initially came about, most Net Neutrality proponents were content with continuing to classify ISPs as relatively lightly regulated information services. So, when the FCC imposed Net Neutrality regulations in 2010, it continued to treat ISPs as information services that were not subject to the stringent regulations of Title II. That came crashing down four years later in Verizon v. F.C.C., where the D.C. Circuit Court of Appeals ruled that the Net Neutrality rules were treating ISPs like common carriers under Title II. 740 F.3d 623 (D.C. Cir. 2014). While the court ruled that the FCC could regulate ISPs as common carriers under Title II, it would have to first formally reclassify them as telecommunication services, which would subject the ISPs to the full brunt of Title II.
This left the Net Neutrality proponents in a pickle: they desperately wanted Net Neutrality, but they did not want to stifle the innovative and dynamic nature of the Internet with the straightjacket of Title II. Rather than lobbying Congress to legislate on the matter, Net Neutrality advocates instead cooked up an unprecedented scheme to utilize the FCC’s forbearance authority that would let them have their cake and eat it too. The FCC would formally reclassify ISPs as telecommunication services that were fully subject to the requirements of Title II. Then it would utilize the FCC’s forbearance authority to exempt ISPs from the vast majority of Title II’s requirements, while simultaneously reenacting Net Neutrality rules.
One proponent of this scheme was the Electronic Frontier Foundation, which strongly supported Net Neutrality and reclassifying ISPs under Title II but also insisted that “we must simultaneously demand that the FCC explicitly reject any telecommunications regulations beyond specific and narrow prohibitions and requirements designed to create a fair and level playing field for innovation and user choice. Without broad forbearance, reclassification can become a nightmare for users, innovators and service providers alike.”
So, to recap:
Step One: Pass Net Neutrality Rules
Step Two: DC Circuit says that Net Neutrality Rules are illegal unless you subject ISPs to Title II
Step Three: Reclassify ISPs so that they are subject to Title II
Step Four: Waive the magic forbearance wand and poof, the ISPs are no longer subject to the vast majority of Title II
Step Five: Pass Net Neutrality Rules Again
You don’t have to be a radical libertarian lawyer waging a holy war against the administrative state to recognize this for what it is. An administrative agency was dead set on enacting a policy that it (and a significant portion of the public) thought was important. It ran into the problem that the laws duly enacted by Congress and signed by the President did not allow the agency to do to what it wanted in the way it wanted. But since Congress had delegated to the agency the power to repeal laws at will, the agency just took a big red marker and crossed out the vast bulk of the law, creating a blank slate from which it could write the rules it wanted the way it wanted.
Maybe this was good for the Internet, but it came at an enormous cost to the separation of powers, the rule of law, and representative government. If the nondelegation doctrine forbids anything, then surely this is it. Those who are hopeful that the current Supreme Court will strike back at the expansive administrative state would do will to take aim at the FCC’s unconstitutional forbearance authority.