Pai Likely Lacks Votes for Net Neutrality Rules Based on 706, Without More FCC Members

But the dynamic of the FCC could soon change with the addition of nominees Brendan Carr and Jessica Rosenworcel. Carr, Pai’s current general counsel, is considered likely to support Pai. With a partial dissent from O’Rielly, the chairman would need one additional vote and that could put Rosenworcel in a key position on one of the first big orders after her return to the agency. Democrats seeking net neutrality legislation on Capitol Hill face long odds (see 1707210038). And a draft inquiry on Section 706 is circulating at the commission (see 1707210036).

After the U.S. Court of Appeals for the D.C. Circuit overturned parts of 2010 net neutrality rules in its 2014 Verizon decision, the commission revisited them under then-Chairman Tom Wheeler. In 2015, the Wheeler FCC handed down tougher rules while also reclassifying broadband as a Title II service.

Some commenters raised the issue in net neutrality filings last week. Verizon said Section 706 “affords the Commission some authority to adopt rules pertaining to the open Internet.” Public Knowledge and Common Cause said the NPRM suggests “Section 706 is merely ‘hortatory’ and instead reflects a ‘deregulatory bent,’ without containing an affirmative grant of authority.” The May NPRM says that prior to the 2010 rules, the FCC generally interpreted 706 (a) and (b) as not containing a delegation of regulatory authority. “The text of these provisions also appears more naturally read as hortatory, particularly given the lack of any express grant of rulemaking authority, authority to prescribe or proscribe the conduct of any party, or to enforce compliance,” the NPRM said.

O'Rielly has said publicly “many times” he doesn't believe Section 706 provides the FCC authority to enact regulations of broadband network management, a lawyer with wireless clients said. “Then-Commissioner Pai said the same thing over the years,” the lawyer said. “Nonetheless, some modest 706 authority is the law of the land, for now, thanks to the D.C. Circuit's 2014 Verizon opinion.”

Former FCC officials said that there is little chance Rosenworcel would vote to approve rules while overturning Title II and that O’Rielly is the “swing vote.” Two industry officials with ties to the Trump administration said there is not middle ground for the Trump White House, which wants congressional action and any oversight to be by the FTC. A Trump spokeswoman said this week that Congress should act “and create regulatory and economic certainty” (see 1707180009).

Gigi Sohn, a top Wheeler aide​, said Pai could give Congress a chance to legislate. “You not only have all of the ISPs and all of their surrogates saying the Congress should do it, you’re now having the president say that,” Sohn said. Pai “can either do the worst possible thing -- reclassify and repeal and not replace, with the hope that that’s going to drive people to the legislative table -- or he can take a regulatory pause, which I think is the smarter thing to do.” Pai seemed to hope that release of the NPRM would force action, she said. “That didn’t work,” she said. “I would caution him against blowing everything up.”

“My guess is that at the end of the day all three Republican commissioners decide that Section 706 is not an independent grant of regulatory authority,” said Randolph May, president of the Free State Foundation. The D.C. Circuit upheld the Wheeler commission’s view of Section 706 by “applying a good dose of Chevron deference,” he said. “That deference is likely to cut the other way if the Pai commission goes back to the original view of Section 706.”

"These complexities show why it is often difficult to unwind a regulatory regime,” said Robert McDowell of Mobile Future. “All too often, the regulatory state offers only a one-way ratchet absent a clear mandate from Congress. But if anyone can find a path forward, it's Ajit Pai."

The debate shows that the Communications Act is out of date and Congress needs to act, said Mark Jamison, University of Florida professor and a member of the Trump FCC transition landing team. “We need a statute that permits ex ante regulation to protect consumers in instances of actual monopoly,” he said. “Where customers have choice of provider, the FCC’s jurisdiction should be limited to addressing anticompetitive conduct and consumer protections, such as blocking or throttling without a customer’s permission.”

Counting votes is difficult this early, said Doug Brake, senior telecom analyst at the Information Technology and Innovation Foundation. “There are those firmly opposed to Title II, those who want bright-line rules but are more or less silent on how to get them and then the die-hard Title II crowd.”

“What people have to remember about Pai is that he wins by losing,” said Matt Wood, Free Press policy director. “Section 706 is not a basis for real net neutrality rules. The D.C. Circuit made that clear in 2014.”