An appeals court today struck down federal rules that prohibit discrimination in access to broadband services, delivering a victory to telecom and cable lobby groups. The court ruling was welcomed by Federal Communications Commission Chairman Brendan Carr, who voted against the Biden-era rules when they were approved in 2023.
The FCC exceeded its legal authority by imposing liability for actions that result in “disparate impact,” instead of merely policing “disparate treatment,” said a ruling by from the US Court of Appeals for the 8th Circuit. The FCC also exceeded its authority by applying the rules to entities that don’t directly offer Internet service to subscribers, according to the ruling issued unanimously by three judges appointed by Republican presidents.
“Today’s appellate court decision is another common-sense win for nondiscrimination,” Carr said today. Carr claimed the rules “would have required broadband providers and many other businesses to discriminate against people based on their race, gender, or other protected characteristics,” but did not explain how the rules would have required discrimination. Carr also compared the rules to diversity, equity, and inclusion (DEI) policies that he has called discriminatory.
John Bergmayer, legal director of advocacy group Public Knowledge, criticized the court decision. “The practical effect is to eliminate a rule that addresses a documented problem,” he said. “Lower-income neighborhoods and communities of color get slower service, older equipment, and higher prices for the same product their richer neighbors buy. After today, the FCC can act only when it proves a smoking-gun case of conscious bias, which almost never exists in writing.”
Rule enabled discrimination complaints
As we’ve previously written, the FCC rules let consumers file complaints about alleged discrimination and define the elements the FCC would examine when investigating whether an entity should be punished for discrimination. The Biden-era order said that “all penalties and remedies will be available when we determine that our rules have been violated.”
The FCC defined discrimination in broadband access as “policies or practices, not justified by genuine issues of technical or economic feasibility, that differentially impact consumers’ access to broadband Internet access service based on their income level, race, ethnicity, color, religion, or national origin or are intended to have such differential impact.”
The rules applied to broadband providers and other entities, such as landlords that restrict broadband options in a building even when multiple providers are available. “Conduct by entities other than broadband providers might impede equal access to broadband Internet access service on the bases specified in the statute,” the FCC said in its rules.
The FCC discrimination rules were challenged in six federal appeals courts by various telecom and cable industry groups, and the case was assigned randomly to the 8th Circuit. Challengers included cable lobby group NCTA, wireless lobby CTIA, and USTelecom, all of which represent ISPs throughout the US. The rules were also challenged by state-level lobby groups representing ISPs in Minnesota, Missouri, Ohio, Florida, Alabama, Mississippi, and Texas.
Other court challengers include groups representing rental housing providers and contractors that help ISPs build broadband networks. Congressional Republicans separately launched a legislative effort to nullify the rules in 2024, but it was never put to a vote.
Rule covered “unintentional discrimination”
8th Circuit judges said the FCC rule covered “unintentional discrimination,” or disparate impact in which “an entity maintains a facially neutral policy or practice or acts for a non-discriminatory reason, yet still disproportionally affects a protected group,” the court said.
Judges found that “Congress did not authorize disparate impact liability” in the Infrastructure Investment and Jobs Act, the US law that authorized the FCC to impose digital discrimination rules. The law “directs the FCC to adopt final rules ‘preventing digital discrimination of access based on income level, race, ethnicity, color, religion, or national origin,’” the appeals court said, adding that “the Supreme Court has repeatedly stated that the ‘normal definition’ of discrimination is ‘differential treatment.’”
The court also ruled against the FCC’s attempt to regulate entities that aren’t broadband service providers. In addition to ISPs, the FCC tried to apply its rules to “entities that provide services that facilitate and affect consumer access to broadband.”
“A non-exhaustive list of covered entities includes contractors retained by broadband providers, entities ‘facilitating or involved in’ providing broadband, and those ‘maintaining and upgrading network infrastructure,’” the court said. “The definition of covered entity ends with a catchall provision that includes ‘[e]ntities that otherwise affect consumer access to broadband Internet access service.’”
The text of the US law the rules are based on “refers to only two parties involved in the provision of broadband service: broadband providers and service subscribers,” the court said. Judges agreed with industry groups that “there is no textual basis for extending a statute focused on the subscriber-provider relationship to the acts and omissions of entities such as local governments and broadband infrastructure owners.”
Agency powers limited by Supreme Court
The court concluded that the FCC “exceeded its statutory authority in two respects that are the core of the final rule—disparate impact liability and the definition of covered entities. We therefore vacate the final rule in its entirety, leaving the FCC with an unfinished obligation to ‘adopt final rules to facilitate equal access to broadband Internet access service’ in compliance with 47 U.S.C. § 1754.”
Industry groups challenged other aspects of the rules, such as “a burden-shifting framework for adjudicating disparate impact claims,” the court said. Judges did not issue conclusions on these other complaints, but said that any new attempt to impose FCC discrimination rules would be judged against a 2024 Supreme Court ruling that limited federal agencies’ authority to interpret ambiguous laws.
Bergmayer said the 8th Circuit judges “got the statute wrong. Congress told the FCC to prevent digital discrimination. The structure of the statute makes it clear that Congress intended to address the effects of longstanding discriminatory practices—not simply to provide recourse when there is clear evidence of intentional unlawful discrimination.”
