(A clearer explanation of the issues in this post, IMO, is at Balkinization)

While the DC Circuit Court ruling on the FCC’s regulation of net neutrality and broadband Internet would appear to require legislative action for reversal, a key litigator in the case tells FDL News that the FCC could, if they chose, work through the ruling on their own by reversing some of the policies of the Bush Administration which sought to deregulate the online space.

I spoke with Marvin Ammori, who argued for the intervenors, Free Press, before the DC Circuit, against Comcast, who brought the case. Ammori argued in the case that the FCC had the statutory authority under the “ancillary jurisdiction” of various communications networks to regulate broadband, but the three-judge panel headed by Clinton appointee David S. Tatel disagreed.

The roots of the case, Ammori said, lie in a series of decisions made by the FCC under George W. Bush from 2001 to 2005. They basically tried to deregulate broadband, “to classify broadband as a clean slate,” Ammori said. They put it under the Title I conditions of the Communications Act, rather than Title II, which allowed for stricter regulation. At the time, consumer groups argued all the way up to the Supreme Court that, if the FCC chose such a framework under Title I, the commission would be powerless to protect consumers. The Supreme Court in their ruling, basically said not to worry because the FCC would have “ancillary jurisdiction,” such that anything with a major impact on communications could be regulated that way.

But the Court never defined what in particular over which the FCC would have jurisdiction. While the current FCC believes the Internet is entwined in everything they do, the Court of Appeals said that reading was too broad when it came to restricting peer-to-peer file sharing, which was basically at issue in this case. Basically, the Appeals Court was “uncomfortable with saying there was no outer limits,” Ammori said.

However, and crucially, Ammori believes that the FCC has an option to change the deregulatory declarations of the Bush Administration and assert a right to regulate broadband under Title II of the Communications Act, without having to go back to Congress for that authority. “Agencies are supposed to develop policy, and the courts are to monitor the outer bounds to see if they comply with the meaning of the statute,” Ammori said. He cited the courts deferring to, for example, the SEC’s policymaking, when they deregulated over the past several decades. The courts generally allow federal agencies some leeway to make a “reasonable” reading of a statute in making policy.

“The FCC could do this on its own,” Ammori insisted. They could go back to the original reading of the statute, which is what they initially applied to DSL service. He said that only the Bush Administration applied it differently, leading us to this case where they had to rely on ancillary jurisdiction to the Appeals Court. Ammori believes the FCC could issue a “declaratory ruling” putting broadband under Title II.

Whether through rulemaking or new Congressional guidelines, clearly something must be done. “The entire net neutrality proposal rests on the Title I ancillary jurisdiction,” Ammori said, “and the court kicked that out from under them.” If the FCC wants to protect free speech and fulfill the campaign promise of the Obama Administration on this front, they need to reclassify broadband. If it stays under Title I, they have little opportunity to regulate anything with respect to it.

And that has implications well beyond net neutrality. Indeed, practically everything in the FCC’s National Broadband Strategy would be at risk. They couldn’t reconfigure the universal service fee, for example, or deal with wireless issues, “without having a regulatory framework,” Ammori said.

In a statement, Derek Turner of Free Press, the intervenor in the lawsuit, made a similar case:

“The decision has forced the FCC into an existential crisis, leaving the agency unable to protect consumers in the broadband marketplace, and unable to implement the National Broadband Plan. As a result of this decision, the FCC has virtually no power to stop Comcast from blocking websites. The FCC has virtually no power to make policies to bring broadband to rural America , to promote competition, to protect consumer privacy or truth in billing. This cannot be an acceptable outcome for the American public and requires immediately FCC action to reestablish legal authority.

“This crisis is not a result of a weak Congressional law, but a direct consequence of the previous two Commission’s misguided and overzealous attempts to completely deregulate America ‘s communications networks. Past FCC actions created a huge loophole in the law that leaves the agency unable to protect consumer privacy or promote universal broadband access.

“The FCC must have the authority to carry out its consumer protection and public interest mission in the 21st century broadband marketplace. The current Commission did not create this existential crisis, but it now has no choice but to face these tough jurisdictional questions head on, and do what is necessary to protect consumers and promote competition.”

UPDATE: John Kerry has a statement up where he explicitly says that he is not advocating reclassification, but that the FCC would be on smooth legal footing if they did:

“I am not advocating that the FCC reclassify broadband services as a result of this decision, but I absolutely believe they maintain that legal authority and it would be entirely consistent with the history of communications law in our country if they did. In fact, in cases involving FCC classification of services, the Supreme Court has always deferred to the agency. It is likely to continue doing so if the agency reversed and provided a strong rationale for updating the Bush era classification of broadband service.”

The other option, outside of Congressional action (which looks remote), would be to appeal this decision to the Supreme Court. Ammori told me that Free Press has not made any decisions regarding that.

UPDATE II: The FCC is hinting that they may indeed reclassify broadband services:

The FCC hinted on Tuesday it still planned to take that route, stressing the agency is “firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans.”

“Today’s court decision invalidated the prior Commission’s approach to preserving an open Internet,” spokeswoman Jen Howard said in a statement. “But the Court in no way disagreed with the importance of preserving a free and open Internet; nor did it close the door to other methods for achieving this important end.”

Markey, a senior member of the House Energy & Commerce Committee and co-author of net neutrality legislation, told the FCC to “take any actions necessary to ensure that consumers and competition are protected on the Internet.”

Reclassifying would be a big deal. Let’s hope they follow through.