6th Circuit Invalidates FCC's 2024 Network Neutrality Order

On January 2, 2025, the U.S. Court of Appeals for the 6th Circuit issued a decision ("Decision")[1] invalidating the Federal Communications Commission's ("FCC") Safeguarding and Securing the Open Internet Order ("Safeguarding Order").[2] The Safeguarding Order reclassified internet service as a "telecommunications service," subjecting providers of internet service to Title II regulation, reversing the FCC's 2018 Restoring Internet Freedom Order (RIF Order) that classified internet service as an "information service" free from Title II regulation.[3]

The Decision may be the final chapter in judicial review of the 20-year saga of the FCC's efforts to impose some form of regulation—however light or heavy—on providers of broadband internet access services. As we previously noted, the Safeguarding Order was scheduled to become effective, in large part, on July 22, 2024. Before that date, industry challenged the Safeguarding Order in eight different circuit courts; those challenges were consolidated, pursuant to 28 U.S.C. § 2112(a)(3), in the 6th Circuit chosen by lottery to hear the challenges.[4] On June 28, 2024, the 6th Circuit denied motions to transfer the case to the D.C. Circuit and ordered supplemental briefing on the effect of Loper Bright Enterprises v. Raimondo (previously covered by DWT here and here), which overruled the Chevron doctrine[5] that had previously required courts to defer to an agency's reasonable interpretation of an ambiguous statute.

On July 12, 2024, 10 days before the bulk of the rules would have taken effect, a 6th Circuit panel issued a temporary administrative stay to consider the impact of Loper Bright and then on August 1, 2024, relying on Loper Bright, stayed the rules pending review on the merits, opining that "[n]et neutrality is likely a major question requiring clear congressional authorization," and that the FCC "failed to satisfy the high bar for imposing such regulations." A different 6th Circuit panel heard expedited oral argument on the merits October 31, 2024, and on January 2, 2025, issued the Decision (3-0) setting aside the entirety of the Safeguarding Order, concluding that the best reading of the Communications Act precluded regulation of internet service as a Title II telecommunications service.

The 6th Circuit's Holding

The issues for the court were: (1) whether the FCC's reclassification of wireline and mobile broadband as "telecommunications services," subject to Title II of the Communications Act, was consistent with the Act; (2) whether the major questions doctrine barred the FCC's reclassifications; and (3) whether the Safeguarding Order was arbitrary and capricious.

In the aftermath of Chevron's demise, the 6th Circuit would not defer to the FCC's permissible interpretation of the Communications Act's definitions but, instead, focused on finding the "best reading of the statute" using traditional statutory construction tools. Although the court held that the issue had not been settled by National Cable & Telecommunications Ass'n v. Brand X Internet Services (Brand X),[6] its ultimate decision was consistent with the majority reasoning in that case. The court here concluded that the FCC "misread[] the text of the Communications Act as it applies to Broadband Internet Service Providers and mobile broadband services." Broadband Internet Service Providers offer users the capability "to 'retrieve' information stored elsewhere," meeting the statutory definition of "information service" and not the definition of a "telecommunications service." Consequently, the FCC lacked statutory authority to classify broadband service as a telecommunications service and impose Title II's more "heavy-handed regulatory regime." The court here also concluded that mobile broadband is a "private mobile service" under § 332(d)(3) of the Act—which is not treated as common carriage or subject to Title II, per § 332(c)(2). Given the court's holdings based on statutory interpretation, the court found no need to address the major questions doctrine or whether the FCC's action was arbitrary and capricious.[7]

How Loper Bright Affected the Decision

In Loper Bright, the Supreme Court indicated that Chevron's demise marked a return to earlier guidance for weighing agency interpretations of statutes, as set forth in Skidmore v. Swift & Co., 323 U.S. 134 (1944) where, the Court explained, the "'weight of [an agency] judgment in a particular case,' . . . would 'depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control."[8] Without citing Skidmore, the panel effectively engaged with two of the factors that Skidmore identified. As to the validity of the FCC's reasoning, the court identified flaws in the FCC's reasoning—particularly with respect to its construction of the phrase "offering of a capability," and the role of "retrieval" of information inherent in internet access. As to consistency, the Decision analyzed the Safeguarding Order's inconsistency with past FCC decisions, noting that "[a]pplying Loper Bright means we can end the FCC's vacillations." The FCC's technical expertise arguably reflects another factor (potentially) giving the FCC the "power to persuade." Ultimately, the Court was persuaded, however, that the FCC's expertise cannot overcome limits Congress established in the Act. "We acknowledge that the workings of the Internet are complicated and dynamic, and that the FCC has significant expertise in overseeing 'this technical and complex area.' Brand X, 545 U.S. at 992. Yet, post-Loper Bright, that 'capability,' if you will, cannot be used to overwrite the plain meaning of the statute." This conclusion reflects the court's view that the core question was one of statutory interpretation—a question of law—rather than a technical question—a question of fact—about the workings of the internet.

Impact and Key Takeaways

• The RIF Order Remains Intact: In practical terms, the Decision preserves the status quo. Because it expressly "set aside the [already stayed] FCC's Safeguarding Order," barring further review, the Safeguarding Order will never take effect, leaving in force the FCC's RIF Order—including the transparency rule—but leaving the FCC's 2020 Order on Remand (RIF Remand Order) under review at the D.C. Circuit.[9]
• Ending FCC Indecision? The Decision, along with the overruling of Chevron, suggests that the era of FCC reversals on network neutrality is over. Under the Trump Administration, with incoming Chairman Carr, the FCC is expected to withdraw from any effort to uphold the Safeguarding Order. Commissioner Carr praised the Decision, calling network neutrality rules a departure from the bipartisan consensus "that provided a stable regulatory framework that allowed the Internet in America to flourish." Indeed, the new FCC leadership likely would have repealed most, if not all, of the Safeguarding Order if it had ever taken effect. However, private parties supporting the Safeguarding Order may continue to litigate in support of it, arguing that the "best" interpretation of the Communications Act is the one classifying internet service as a telecommunications service subject to Title II.
• New Opportunities: Enterprising internet service providers, previously cautious about making changes to operations or business models due to fluctuating FCC rules periodically barring throttling and paid prioritization, or general prohibitions on "unreasonable" conduct, may, once the dust settles, feel empowered to test market acceptance of such changes. These experiments could result in innovative market offerings and/or new litigation as internet service providers are still subject to the FCC's transparency and broadband labeling rules.
• Congressional Action: Proponents of network neutrality may push Congress to codify clear network neutrality obligations, such as bans on blocking, throttling, and paid prioritization, while avoiding a general "reasonableness" duty and permanently precluding full-blown common carrier regulations at both federal and state levels. Revitalized efforts to pass federal legislation could enshrine network neutrality principles into law. Following the Decision, FCC Commissioner Gomez and outgoing FCC Chairwoman Rosenworcel released statements calling for Congress to enact federal network neutrality legislation.
• Shift to the States: The Decision may also prompt proponents to renew efforts to enact, expand, or strengthen state network neutrality rules. When the earlier RIF Order declared that broadband was an information service not subject to federal regulation, the courts ruled that this same determination meant that the FCC lacked the power to preempt states from imposing their own network neutrality regulations. California and Washington have adopted network neutrality rules that apply to all broadband providers operating within their respective borders,[10] while other states—Colorado, Maine, Oregon, and Vermont—have enacted laws that impose network neutrality requirements on broadband providers who contract with those states.[11] In the absence of a federal framework, other state legislatures may consider their own network neutrality laws. Additionally, state legislatures may attempt to regulate broadband service rates in the absence of FCC authority to do so. For example, New York's Affordable Broadband Act, which requires broadband internet providers to offer reduced rate plans to low-income New Yorkers, was recently upheld by the Second Circuit against preemption challenges.[12]

Next Steps – Many Issues Still in Play

• In its briefing, the FCC noted the possibility that the "Open Internet rules could otherwise be reinstated … by the D.C. Circuit (in still-pending litigation over the Mozilla remand)." In Mozilla, the D.C. Circuit largely upheld the RIF Order and remanded to the FCC to consider its public safety implications, address the lack of a rationale for excluding broadband from the federal pole attachment statute, and address the statutory basis for using Lifeline support for broadband if classified as an information service.[13] The FCC responded by addressing those issues in its RIF Remand Order in late 2020, which prompted several petitions for reconsideration and a petition for judicial review. As the FCC noted, "[t]he RIF Remand Order (and, through it, the RIF Order) has remained under further administrative and judicial review."[14]
• However, in the Order on Reconsideration portion of the Safeguarding Order, the FCC purported to dispose of those petitions, in light of its new order.[15] But because the Safeguarding Order never went into effect and has now been set aside by the 6th Circuit, the RIF Order remains in force (as modified by Mozilla), and the D.C. Circuit retains jurisdiction over further review of the RIF Remand Order.[16] This means the D.C. Circuit, in the wake of Loper Bright, is also free to conduct its own analysis of the "best" interpretation of the statutory definitions. That could result in a circuit split as to the classification of broadband internet service if the D.C. Circuit determines that broadband internet service is a "telecommunications service."
• As far as the Decision itself is concerned, Under the Federal Rules of Appellate Procedure and the 6th Circuit's rules, petitions for panel rehearing or rehearing en banc are due within 45 days after entry of judgment. Alternatively, a party may petition for writ of certiorari in the Supreme Court. Given the incoming Trump administration, which will result in a 3-2 majority of Republican-appointed commissioners at the FCC, and the incoming chairman's stated views, it appears unlikely the government will seek any further review or pursue certiorari. However, intervenors supporting network neutrality regulations could seek such review.

Conclusion

For the moment at least, internet service will not be subject to Title II regulation. However, given the upcoming change in administration, the prospect for continued litigation, and possible legislation, there could be new disputes and changes at both the federal and state levels in the coming months. DWT's communications practice group is continuing to actively analyze the implications of the Decision and the challenges and opportunities it creates for both edge-providers, broadband providers, infrastructure builders, network operators, and others. We invite interested readers to reach out to DWT with any questions about how the Decision and its aftermath may affect their businesses and customers.