It seems likely that one or more Petitioners in the consolidated case USTA v. FCC will seek review, either en banc or in the Supreme Court, of the D.C. Circuit’s decision released on June 14th.  (DWT’s detailed advisory is available here). Generally speaking, most commentators would probably agree that en banc review is realistic only when there is a vigorous dissent, the author of which will lobby the other judges not on the panel to vote for rehearing. While Judge Williams’ dissent here meets that standard for vigor in its well-reasoned criticism of the FCC’s decision-making process, it is largely an academic exercise, as he concedes that the FCC had statutory authority to reclassify Internet access, but objects to the reclassification process as arbitrary and capricious.

That said, the dissent’s conclusion takes a clever swipe at the FCC’s decision-making process and may prove quotable in pleadings seeking further review or in other cases involving statutory interpretation testing the limits of Chevron deference. Judge Williams found that the FCC’s failure to find that broadband ISPs exerted market power doomed the reclassification as arbitrary and capricious. Those who study the APA know that when an agency exercises its statutory authority to interpret ambiguous statutory provisions, it gains substantial deference, such that even if judges disagree with the end result, that is almost always not enough to overturn it. Here the majority “refused to second-guess” the FCC’s decision to reclassify and accepted the FCC’s “disavow[al of its] prior interpretations to the extent they held otherwise.”

But Judge Williams looked at it a little differently; when the FCC decided to forbear from applying many Title II provisions to Internet access service he thought that competition in the broadband market would have provided significant support to the agency’s logic – but such a finding would contradict the reclassification:

While a finding that the broadband market was generally competitive would, under Commission precedent, amply justify its forbearance decisions, here again the Commission refuses to take that position. Doing so would obviously undermine its decision to reclassify broadband under Title II. Strategic ambiguity best fits its policy dispositions. But strategic ambiguity on key propositions underlying its regulatory choices is just a polite name for arbitrary and capricious decision making.

“Strategic ambiguity” indeed. And that may come back to bite the FCC in using another statute to preempt state laws prohibiting municipal broadband.  In The State of Tennessee et al. v. FCC, two states have challenged the FCC’s attempt to preempt state laws that restrict the ability of municipalities to provide broadband service. As we have discussed previously, the FCC relied on its authority under Section 706 of the Communications Act. On Wednesday June 15th, the State of Tennessee notified the Sixth Circuit of the D.C. Circuit’s decision in USTA v. FCC. In its Rule 28(j) letter, Tennessee noted that although the D.C. Circuit acknowledged that Section 706 does grant the FCC some independent rulemaking authority, even the D.C. Circuit concluded that Section 706 is ambiguous. That ambiguity, Tennessee argues, means that the statute cannot contain the necessary “plain statement” of preemption to authorize the FCC’s invalidation of state laws that preclude municipalities from providing broadband service.

On Thursday, the FCC responded with its own letter to the Sixth Circuit.  The FCC admits to no ambiguity, instead focusing on the D.C. Circuit’s holding that Section 706 “vests the Commission ‘with affirmative authority to enact measures encouraging the deployment of broadband infrastructure.’” Ultimately, the FCC suggests that the Sixth Circuit follow the D.C. Circuit’s lead and find broad authority for the Commission to act under Section 706.

We may yet hear more from the interested cities on the impact of USTA v. FCC on the municipal broadband issue confronting the 6th Circuit. If and when we do, we will let you know about it.