FCC sued over new digital discrimination rule

The FCC on Tuesday was sued over its new rule banning digital discrimination. The lawsuit was filed by the US Chamber of Commerce, alongside two business groups based in Texas: the Texas Association of Business and Longview Chamber of Commerce.

In a statement about the lawsuit, the Chamber of Commerce said that the FCC's digital discrimination rule "is overly broad" and that it would "make it more difficult to deploy broadband service to all Americans and communities due to increased compliance costs and stifled private sector investment."

The suit, filed with the fifth circuit court of appeals, alleges that the new digital discrimination rule is "arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act" and that it is "in excess of the Commission's statutory authority; and otherwise contrary to law." 

As such, the petitioners "respectfully request that this Court hold unlawful, vacate, enjoin, and set aside the Order and provide such additional relief as may be appropriate."

The lawsuit is not entirely unexpected. Various industry groups opposed to the rule had hinted at forthcoming legal challenges in public comments on the draft digital discrimination order, if the FCC ruled in a way they found unfavorable.

Related:Industry groups to FCC: Tread lightly on digital discrimination rules

In particular, industry groups were concerned with the FCC's decision to ban "digital discrimination of access," which the FCC describes as "Policies or practices, not justified by genuine issues of technical or economic feasibility, that (1) differentially impact consumers' access to broadband internet access service based on their income level, race, ethnicity, color, religion or national origin, or (2) are intended to have such differential impact."

Industry groups wanted the FCC to focus purely on intentional discrimination and suggested that a broader interpretation would be challenged.

NCTA–The Internet & Television Association, for example, had told the FCC that the "major questions doctrine casts further doubt on the validity of the interpretation" of the FCC's order on digital discrimination. And USTelecom, in its own comments, argued that the digital discrimination order "departs from decades of civil rights law and policy in the disparate impact framework it adopts."

The FCC voted to adopt its order banning digital discrimination in November 2023, as was mandated by the 2021 Infrastructure Investment and Jobs Act. The vote fell on party lines, with the Commission's three Democrats approving and two Republicans voting against.

Related:Industry hints at possible legal challenges to FCC's digital discrimination rules

Republican Commissioner Brendan Carr also indicated the FCC would be sued over the rule. "Congress never authorized the FCC to regulate these industries or entities," Carr wrote in a statement.

Joint resolution introduced

The lawsuit filing this week was further accompanied by a joint resolution of disapproval, introduced by House Republicans, seeking to overturn the FCC's digital discrimination rule.

According to the text of the joint resolution, the bill, if enacted, would ensure that the FCC's digital discrimination rule "shall have no force or effect."

"This FCC 'Digital Discrimination' rule will undoubtedly widen the digital divide by stifling future investment in broadband deployments. Not only is it unconstitutional, but it goes against the very core of free market capitalism. Congress must block the FCC's totalitarian overreach," Georgia Representative Buddy Carter, who sponsored the joint resolution, said in a statement.

The joint resolution also has the support of several industry groups, including the Cellular Telecommunications Industry Association (CTIA) and USTelecom, as well as the US Chamber of Commerce. ACA Connects, which represents small and independent cable companies, also expressed support for the bill in a statement from its CEO, Grant Spellmeyer.

"These are important efforts that are further making the case that the FCC's attempt to regulate every corner of the internet will undermine the intended goal of equal access to broadband," said Spellmeyer, in an email newsletter, referring to both the lawsuit and joint resolution. "These rules go far beyond the FCC's legal authority and will deter investment, innovation, and deployment to close the digital divide," he added.

Supporters weigh in

Of course, not everyone is opposed to the FCC's digital discrimination order. Consumer advocacy groups like the National Digital Inclusion Alliance (NDIA) have been fighting for what they say are necessary rules banning discriminatory practices.

"We finally have rules to help us address and prevent the results of discriminatory actions that keep people from the absolutely necessary Internet access that we all require today," Angela Siefer, executive director of the NDIA, said in a conversation with Light Reading about the lawsuit and joint resolution. "If the system were working today to have equitable access to the Internet, we would not need these rules."

Relatedly, another group that supports the digital discrimination order – the Benton Institute for Broadband & Society – also filed its own challenge in an effort to strengthen certain aspects of the FCC's rule, in part by requiring a formal complaint process as opposed to the informal complaint procedure adopted in the digital discrimination order. Benton also seeks to apply digital discrimination rules to participants in the Broadband Equity Access and Deployment (BEAD) program.

Notably, while the Chamber of Commerce filed its petition with the fifth circuit court, Benton filed its petition with the DC circuit court of appeals. As per federal law, when challenges are filed in multiple circuits, a lottery is conducted to determine which court will hear the case.

"We are extremely pleased that the FCC has adopted new and powerful rules prohibiting digital discrimination. We have nonetheless challenged two small, but important provisions of the rules today in the U.S. Court of Appeals for the District of Columbia Circuit," said Benton Senior Counselor Andrew Jay Schwartzman, in a statement about the petition.

"We believe that these invaluable rules could be strengthened by seeking a judicial decision ordering the FCC to create a formal complaint procedure and to apply the full force of the rules to recipients of future grants from the National Telecommunications and Information Administration's Broadband, Equity, Access, and Deployment (BEAD) Program. We trust that the Court will agree."

Barring any successful effort to stop it, the FCC's digital discrimination rule is to take effect in March.

New rule in practice

Notably, the lawsuit and joint resolution also come following news this week that the Los Angeles City Council passed its own resolution to prohibit digital redlining: a practice by which broadband providers neglect to deliver service to low-income communities.

The new resolution is designed to work with the FCC's digital discrimination rule in that it seeks to create a process for the city council to forward digital discrimination claims from the public to the FCC for review. As per the federal digital discrimination rule, the FCC will review such complaints and issue fines as necessary, if and when instances of accused digital discrimination can't be justified by the provider's economic or technical limitations.

The LA ordinance, adopted unanimously last week, further directs the city's Civil, Human Rights and Equity Department (CHRED) to "develop a method to analyze prospective digital discrimination complaints that should include demographic information to identify potential trends within the City, and report annually on those trends."

[Ed. note: This story was updated on 1/31/24 at 1pm ET to include details about Benton's petition.]