Eighth Circuit Vacates the FCC's 2023 "Digital Discrimination" Rule

On May 6, 2026, a unanimous panel of the United States Court of Appeals for the Eighth Circuit vacated the Federal Communications Commission's (FCC) rule preventing discrimination in consumer access to broadband services. The court held that the FCC exceeded its authority under Section 60506 of the Infrastructure Investment and Jobs Act (IIJA) by seeking: (1) to prohibit not only intentional discrimination in broadband access (disparate treatment), but also unintentional discrimination, or practices and policies that are facially neutral yet still disproportionately harm protected groups in broadband access (disparate impact); and (2) to regulate entities only tangentially related to the provision of broadband services. Because the imposition of disparate impact liability and the overly broad definition of covered entities were "the core of the final rule," the court vacated the rule in its entirety. As a result of the court's decision, the FCC's 2023 digital discrimination rule is no longer in effect in any respect, and there is currently no operative federal regulatory framework implementing § 60506 of the IIJA. Absent further action, the FCC may not enforce any provision of the vacated Rule.

FCC Digital Discrimination Rule

In 2023, pursuant to one title of the IIJA, the Digital Equity Act of 2021, codified at 47 U.S.C. § 1754, the FCC by a three to two vote adopted its digital discrimination rule (Rule), 47 C.F.R. §§ 16.1-16.7. The Rule was aimed at facilitating equal access to broadband by preventing and eliminating "digital discrimination of access based on income, race, ethnicity, color, religion, or national origin."

The Rule imposed liability for policies and practices that result in discrimination against protected groups either through disparate treatment or disparate impact and shifted the burden of proof to the entities accused of discrimination to prove that a challenged policy or practice was justified by "genuine issues of technical or economic feasibility." The Rule defined the entities subject to the rule to mean not only broadband service providers, but contractors retained by broadband providers, entities "facilitating or involved in" providing broadband or "maintaining and upgrading network infrastructure," as well as all "[e]ntities that otherwise affect consumer access to broadband internet access service." 47 C.F.R. § 16.2.

While the Rule provided a safe harbor to entities whose policies complied with the nondiscrimination requirements of broadband programs (including Broadband Equity Access Deployment (BEAD) programs and Universal Service Fund (USF) high-cost program), the FCC promised to bring "its full suite of available remedies, including possible monetary forfeitures" for disparate treatment and disparate impact violations. To that end, the FCC updated its complaint process to accept informal digital discrimination complaints from consumers and to pursue Commission-initiated investigations, but declined to adopt a formal complaint process. The FCC also developed model policies for state and local governments to implement to prevent digital discrimination against protected groups.

Legal Challenges—Too Much and Not Enough

Filing appeals in six different U.S. Courts of Appeals, several telecommunications and broadband industry groups (Industry Petitioners) promptly challenged the Rule for its imposition of disparate impact liability, burden-shifting framework, and sweeping application to entities other than broadband providers. The Industry Petitioners argued that the FCC exceeded its statutory authority by seeking to regulate entities other than internet service providers, and by shifting the burden of proof to accused entities without satisfying the applicable Administrative Procedure Act (APA) preliminary regulatory analysis and notice publication requirements.

A coalition of public interest groups (Public Interest Petitioners) intervened in support of the FCC, but also challenged aspects of the Rule for not going far enough to combat digital discrimination. Specifically, the Public Interest Petitioners objected to the FCC's failure to adopt a formal complaint process for digital discrimination claims, and to the provision of a safe harbor presumption for compliance with the non-discrimination requirements of related broadband programs, such as the FCC's USF and the IIJA's BEAD program.

Eighth Circuit Decision—The Loper Bright Era

As a threshold matter, the Eighth Circuit recognized that the legal landscape had changed since the FCC's adoption of the Rule in 2023. Notably, the Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), under which courts deferred to permissible agency interpretations of statutes that were ambiguous or silent on a particular issue. In Loper Bright Enterprises v. Raimondo, 603 U.S. ___, 392 (2024), the Supreme Court interpreted APA § 706 as "mak[ing] clear that agency interpretations of statutes . . . are not entitled to deference." Loper Bright, 603 U.S. at 392 (emphasis in original). The court's analysis reflects the post-Loper Bright regulatory landscape, under which courts no longer defer to agency interpretations of ambiguous statutes. Instead, after Loper Bright, courts must determine whether an agency has acted within its statutory authority and, if so, whether the agency's interpretation aligns with the court's best interpretation of any ambiguity in the statute.

The IIJA Does Not Authorize Disparate Impact Liability

In evaluating whether the IIJA authorized disparate impact liability, the court—unfettered by Chevron deference—determined that the plain language of the statute did not expressly or impliedly authorize the FCC to pursue such claims. In reaching this conclusion, the court compared the language of IIJA § 60506, 47 U.S.C. § 1754, with three other statutes that the Supreme Court had held authorized disparate impact liability by implication: Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967 (ADEA), and the Fair Housing Act (FHA). In each statute, Congress focused on the result of the practices, rather than the intent of the actor. For example, section 4(a)(2) of the ADEA states, "[i]t shall be unlawful for an employer . . . to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age." 29 U.S.C. § 623(a)(2) (emphasis added). The Supreme Court in Smith v. City of Jackson, 544 U.S. 228 (2005), compared the text of section 4(a)(2) with that of § 703(a)(2) of Title VII, 42 U.S.C. § 2000e–2(a)(2), noting that each statute included similar language: "otherwise adversely affect," which "focuses on the effects of the action on the employee rather than the motivation for the action of the employer." Smith, 544 U.S. at 236. The "results-oriented language" in each of these statutes is notably absent in § 60506, thereby bolstering the court's conclusion that the statute does not authorize disparate impact liability by implication.

The court acknowledged that the Supreme Court did interpret FHA § 805(a), 42 U.S.C. § 3605(a) to encompass disparate impact liability, even though it does not include the "otherwise adversely affect" language—but in that case, it relied on the use of the word "discriminate" in a related statute that focused on the results of discrimination, rather than the intent, and also focused on later FHA amendments that supported the court's conclusion that Congress intended § 805(a) to encompass disparate impact liability, despite the lack of the "otherwise" language. Texas Dep't of Hous. & Cmty. Aff. v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015).

For its part, the FCC further argued that the word "prevent" in § 60506(b)(1)'s directive to adopt rules is itself a results-oriented word that provides broad authority over any practice that affects broadband access. The court disagreed, noting the FCC is tasked with preventing discrimination, which is an intentional action. The FCC also argues that the word "eliminate" in § 60506(b)(2) grants it broad authority to eliminate all forms of discrimination, and the term "opportunity," which was also found in Title VII and the ADEA, likewise implies authority to impose disparate impact liability as it refers to consequences of actions. The court disagreed, noting that "eliminate" is a future-oriented word that indicates forward-looking remedies rather than backward-looking remedies, like monetary fines. Further, the word "opportunities" was not the key language signaling disparate impact liability in the referenced statutes (rather, it was the "otherwise adversely affected" language) and thus provided no support for the FCC's imposition of disparate impact liability.

In sum, the court found that, based on the plain language of the statute and its context, FCC authority to impose disparate impact liability is not implied, and further found that the governing instruction in Inclusive Communities—that "disparate-impact liability must be limited so employers and other regulated entities are able to make the practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system"—applies to IIJA § 60506.

The FCC Broad Definition of "Covered Entities" Exceeded Its Authority Under the IIJA

The court agreed with Industry Petitioners that there is no textual support for extending the scope of the statute to cover entities other than subscribers and providers of broadband services. The court's review of § 60506 revealed a dual focus on only two parties involved in the provision of broadband service: broadband providers and service subscribers. The court noted that Congress also directed the FCC to "develop model policies and best practices that can be adopted by States and localities to ensure that broadband internet access service providers do not engage in digital discrimination." § 1754(d) (emphasis added by court). Finally, the policy statement calls for technical and service quality metrics—all of which are within the control of the provider.

In support of its positions, the FCC cited to prior cases upholding the extension of regulation over leased property (and thus landlords) by the FCC to enforce rules prohibiting restrictions on direct-to-home satellites, as well as an FHA case wherein non-housing providers, such as insurers and appraisers, were likewise regulated. The court noted that these cases were grounded in Chevron deference, which no longer applies, and the relationships between the broadband providers and the service industries the FCC seeks to regulate are far more attenuated.

Accordingly, the court concluded that the FCC exceeded its authority in two critical aspects—disparate impact liability and the definition of covered entities—and vacated the Rule in its entirety, thereby rendering the remaining challenges raised by the Industry and Public Interest Petitioners no longer ripe for Article III judicial review.

The Future of Digital Discrimination Rules?

In practical terms, the decision returns the FCC to the starting point regarding its statutory obligation to adopt rules under § 60506 "to facilitate equal access to broadband internet access service" with the court's guidance that any permissible regulation should be limited to preventing and eliminating "disparate treatment." The court emphasized that the legal rules of the game have changed in the Loper Bright era, as courts now engage in independent interpretation of the relevant statute as opposed to an exercise in deference to an agency interpretation. The court thus confirmed that the standard of review is now de novo "because compliance is not a matter that Congress has committed to the agency's discretion."

Other aspects of the game have changed as well at the FCC. Commissioner Carr, who provided an emphatic and prophetic dissent to the adoption of the Rule, is now Chairman Carr, replacing former Chairman Rosenworcel. Chairman Carr issued an equally emphatic endorsement of the Eighth Circuit's decision to vacate the Rule.

The parties may petition for a panel rehearing, a rehearing en banc, or both—within 45 days of the court's decision—or seek review in the Supreme Court. Importantly, any rehearing or further appellate review would not reinstate the vacated rule absent a stay of the court's decision.

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Susan Stith is counsel, Soraya Mohamed is an associate, Bob Scott is a partner, and John Seiver is senior counsel in the Washington, D.C. office of DWT. For any questions or for more insights, please reach out to the authors or another member of our communications team and sign up for our alerts.