`
`
`
`
`
`No. 24-1179 (and consolidated cases)
`
`In the United States Court of Appeals
`for the Eighth Circuit
`
`
`
`MINNESOTA TELECOM ALLIANCE, ET AL.,
`Petitioners,
`
`v.
`FEDERAL COMMUNICATIONS COMMISSION; UNITED STATES OF AMERICA,
`Respondents.
`
`
`
`On Petition for Review from the
`Federal Communications Commission
`(No. 22-69, FCC 23-100)
`
`
`BRIEF FOR INDUSTRY PETITIONERS
`
`
`JENNIFER B. DICKEY
`KEVIN R. PALMER
`U.S. CHAMBER LITIGATION
`CENTER
`1615 H Street NW
`Washington, DC 20062
`(202) 463-5337
`Counsel for Petitioner the
`Chamber of Commerce of the
`United States of America
`
`
`
` JEFFREY B. WALL
`MORGAN L. RATNER
`ZOE A. JACOBY
`SULLIVAN & CROMWELL LLP
`1700 New York Avenue NW
`Washington, DC 20006
`(202) 956-7500
`wallj@sullcrom.com
`CONNIE L. WANG
`SULLIVAN & CROMWELL LLP
`550 Hamilton Avenue
`Palo Alto, CA 94301
`Counsel for Petitioners the
`Chamber of Commerce of the
`United States of America, Texas
`Association of Business, and
`Longview Chamber of Commerce
`
`
`
` (Additional counsel on next page)
`
`Appellate Case: 24-1179 Page: 1 Date Filed: 04/24/2024 Entry ID: 5386642
`
`

`

`
`
`ROMAN MARTINEZ
`MATTHEW A. BRILL
`BLAKE E. STAFFORD
`LATHAM & WATKINS LLP
`555 Eleventh Street NW,
`Suite 1000
`Washington, DC 20004
`(202) 637-2200
`roman.martinez@lw.com
`Counsel for Petitioners
`MCTA – The Missouri Internet
`& Television Association, Ohio
`Cable Telecommunications
`Association, Florida Internet &
`Television Association, Texas
`Cable Association, and NCTA –
`The Internet & Television
`Association
`
`
`MICHAEL H. PRYOR
`BROWNSTEIN HYATT FARBER
`SCHRECK, LLP
`1155 F Street NW, Suite 1200
`Washington, DC 20004
`(202) 383-4706
`mpryor@bhfs.com
`DAVID B. MESCHKE
`ROSA L. BAUM
`BROWNSTEIN HYATT FARBER
`SCHRECK, LLP
`675 Fifteenth Street, Suite 2900
`Denver, CO 80202
`Counsel for Petitioner National
`Multifamily Housing Council,
`Inc.
`
`
`
`
`
`
`
`THOMAS SCOTT THOMPSON
`MINTZ, LEVIN, COHN, FERRIS,
`GLOVSKY AND POPEO, P.C.
`555 12th Street NW, Suite 1100
`Washington, DC 20004
`(202) 434-7440
`SThompson@mintz.com
`Counsel for Petitioners the
`Wireless Infrastructure
`Association, Power &
`Communications Contractors
`Association, and NATE: The
`Communications Infrastructure
`Contractors Association
`
`
`THOMAS M. JOHNSON, JR.
`JEREMY J. BROGGI
`MICHAEL J. SHOWALTER
`BOYD GARRIOTT
`WILLIAM TURNER
`WILEY REIN LLP
`2050 M Street, NW
`Washington, DC 20036
`(202) 719-7000
`TMJohnson@wiley.law
`Counsel for Petitioners
`Minnesota Telecom Alliance,
`Ohio Telecom Association,
`USTelecom – The Broadband
`Association, CTIA – The
`Wireless Association, Broadband
`Association of Alabama and
`Mississippi, Texas Telephone
`Association, and WISPA – The
`Association For Broadband
`Without Boundaries
`
`
`
`Appellate Case: 24-1179 Page: 2 Date Filed: 04/24/2024 Entry ID: 5386642
`
`

`

`
`
`JEFFREY A. LAMKEN
`RAYINER I. HASHEM
`MOLOLAMKEN LLP
`The Watergate, Suite 500
`600 New Hampshire Avenue NW
`Washington, DC 20037
`(202) 556-2024
`jlamken@mololamken.com
`Counsel for Petitioner ACA
`Connects – America’s
`Communications Association
`
`
`
`STEPHEN E. CORAN
`LERMAN SENTER PLLC
`2001 L Street NW, Suite 400
`Washington, DC 20036
`(202) 416-6744
`scoran@lermansenter.com
`Counsel for Petitioner WISPA –
`The Association For Broadband
`Without Boundaries
`
`
`
`
`
`
`Appellate Case: 24-1179 Page: 3 Date Filed: 04/24/2024 Entry ID: 5386642
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`

`

`
`
`SUMMARY OF THE CASE AND REQUEST FOR ORAL ARGUMENT
`
`These consolidated petitions challenge a Federal Communications
`
`Commission rule implementing Section 60506(b)(1) of the Infrastructure
`
`Investment and Jobs Act. Section 60506(b)(1) directs the Commission to issue
`
`rules “preventing digital discrimination of access” to broadband internet
`
`“based on income level, race, ethnicity, color, religion, or national origin.” The
`
`challenged rule interprets “digital discrimination” to mean not only intentional
`
`discrimination but also actions with a disparate impact. Disparate-impact
`
`liability is rare, and every interpretive clue here confirms that Congress did
`
`not intend to impose it. The Commission has nevertheless created the first-
`
`ever regime prohibiting business practices that cause a disparate impact
`
`“based on income level.” Petitioners here (Industry Petitioners) contend that
`
`the rule exceeds the Commission’s statutory authority and that the Order is
`
`arbitrary and capricious under the Administrative Procedure Act.
`
`Given the many complex and novel questions presented and the fact that
`
`these cases involve two distinct, nonaligned groups of petitioners, Industry
`
`Petitioners respectfully request that the Court afford an hour of oral
`
`argument time, with the precise division to be determined after the briefing.
`
`Appellate Case: 24-1179 Page: 4 Date Filed: 04/24/2024 Entry ID: 5386642
`
`i
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`
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`CORPORATE DISCLOSURE STATEMENT
`
`Pursuant to Federal Rule of Appellate Procedure 26.1 and Eighth
`
`Circuit Rule 26.1A, Industry Petitioners make the following disclosures:
`
`ACA Connects – America’s Communications Association has no parent
`
`corporation and no publicly held corporation owns 10% or more of its stock,
`
`pays 10% or more of its dues, or possesses or exercises 10% or more of the
`
`voting control of ACA Connects.
`
`The Broadband Association of Alabama and Mississippi is a non-profit
`
`501(c)(6) organization that has no parent company, and no publicly held
`
`company has a 10% or greater ownership interest in the Broadband
`
`Association of Alabama and Mississippi.
`
`The Chamber of Commerce of the United States of America has no
`
`parent corporation, and no publicly held company owns 10% or more of its
`
`stock.
`
`CTIA – The Wireless Association has no parent corporation, and no
`
`publicly held corporation owns 10% or more of its stock.
`
`Florida Internet & Television Association has no parent company, and
`
`no publicly held corporation owns 10% or more of its stock.
`
`Appellate Case: 24-1179 Page: 5 Date Filed: 04/24/2024 Entry ID: 5386642
`
`ii
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`

`
`
`Longview Chamber of Commerce has no parent corporation, and no
`
`publicly held company owns 10% or more of its stock.
`
`MCTA – The Missouri Internet & Television Association has no parent
`
`corporation, and no publicly traded corporation owns 10% or more of its stock.
`
`The Minnesota Telecom Alliance is a non-profit 501(c)(6) organization
`
`that has no parent company, and no publicly held company has a 10% or
`
`greater ownership interest in the Minnesota Telecom Alliance.
`
`NATE: The Communications Infrastructure Contractors Association
`
`(NATE) is a Section 501(c)(6) not-for-profit corporation organized under the
`
`laws of South Dakota. NATE does not have a parent corporation, and no
`
`publicly held corporation has an ownership stake of 10% or more in it.
`
`National Multifamily Housing Council, Inc. (NMHC) is a Section
`
`501(c)(6) not-for-profit corporation organized under the laws of Washington,
`
`D.C. NMHC does not have a parent corporation, and no publicly held
`
`corporation has an ownership stake of 10% or more in the corporation.
`
`NCTA – The Internet & Television Association has no parent
`
`companies, subsidiaries, or affiliates whose listing is required by Rule 26.1.
`
`Ohio Cable Telecommunications Association has no parent corporation,
`
`and no publicly traded corporation owns 10% or more of its stock.
`
`Appellate Case: 24-1179 Page: 6 Date Filed: 04/24/2024 Entry ID: 5386642
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`iii
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`

`

`
`
`The Ohio Telecom Association is a non-profit 501(c)(6) organization that
`
`has no parent company, and no publicly held company has a 10% or greater
`
`ownership interest in the Ohio Telecom Association.
`
`Power & Communications Contractors Association (PCCA) is a Section
`
`501(c)(6) not-for-profit corporation organized under the laws of Missouri.
`
`PCCA does not have a parent corporation, and no publicly held corporation
`
`has an ownership stake of 10% or more in it.
`
`Texas Association of Business has no parent corporation, and no publicly
`
`held company owns 10% or more of its stock.
`
`Texas Cable Association has no parent corporation, and no publicly
`
`traded corporation owns 10% or more of its stock.
`
`Texas Telephone Association is a non-profit 501(c)(6) organization that
`
`has no parent company, and no publicly held company has a 10% or greater
`
`ownership interest in the Texas Telephone Association.
`
`USTelecom – The Broadband Association has no parent corporation,
`
`and no publicly held corporation owns 10% or more of its stock.
`
`Wireless Infrastructure Association (WIA) is a Section 501(c)(6) not-for-
`
`profit corporation organized under the laws of Virginia. WIA does not have a
`
`Appellate Case: 24-1179 Page: 7 Date Filed: 04/24/2024 Entry ID: 5386642
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`iv
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`

`
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`parent corporation, and no publicly held corporation has an ownership stake
`
`of 10% or more in it.
`
`WISPA – The Association For Broadband Without Boundaries has no
`
`parent corporation, and no publicly held corporation owns 10% or more of its
`
`stock.
`
`
`
`
`
`
`
`
`
`
`v
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`Appellate Case: 24-1179 Page: 8 Date Filed: 04/24/2024 Entry ID: 5386642
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`

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`
`
`TABLE OF CONTENTS
`
`Page
`
`SUMMARY OF THE CASE AND REQUEST FOR ORAL
`ARGUMENT .................................................................................................. i
`
`CORPORATE DISCLOSURE STATEMENT .................................................. ii
`
`INTRODUCTION................................................................................................... 1
`
`JURISDICTIONAL STATEMENT .................................................................... 5
`
`STATEMENT OF THE ISSUES ........................................................................ 6
`
`STATEMENT OF THE CASE ............................................................................ 7
`
`A.
`
`Statutory Background ........................................................................ 7
`
`1.
`
`2.
`
`The Shrinking Digital Divide .................................................. 7
`
`The IIJA’s Support For Broadband ....................................... 9
`
`B. Regulatory Background ................................................................... 11
`
`SUMMARY OF ARGUMENT ............................................................................ 16
`
`STANDARD OF REVIEW ................................................................................. 22
`
`ARGUMENT ......................................................................................................... 22
`
`I.
`
`THE COMMISSION LACKS STATUTORY AUTHORITY TO
`IMPOSE DISPARATE-IMPACT LIABILITY ..................................... 23
`
`A.
`
`The Plain Text Of Section 60506(b)(1) Authorizes Only
`Disparate-Treatment Rules ............................................................. 24
`
`B. Other Interpretive Tools Confirm The Plain Text ........................ 35
`
`1.
`
`Congress did not mention disparate impact in
`enacting the bipartisan IIJA ................................................. 35
`
`Appellate Case: 24-1179 Page: 9 Date Filed: 04/24/2024 Entry ID: 5386642
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`vi
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`
`2.
`
`3.
`
`Congress did not silently permit the Commission to
`outlaw ordinary business practices in the broadband
`industry .................................................................................... 38
`
`Congress did not discourage ISPs from building out
`internet infrastructure ........................................................... 42
`
`C. At A Minimum, The Major-Questions Doctrine
`Precludes Reading Section 60506 To Encompass
`Disparate-Impact Liability .............................................................. 46
`
`1.
`
`2.
`
`Imposing disparate-impact liability here presents a
`major question ......................................................................... 47
`
`Section 60506 does not supply the clear congressional
`authorization required ............................................................ 51
`
`II. THE COMMISSION LACKS STATUTORY AUTHORITY
`FOR ITS NOVEL BURDEN-SHIFTING FRAMEWORK ................ 52
`
`A.
`
`There Is A Settled Burden-Shifting Framework For
`Disparate-Impact Liability .............................................................. 53
`
`B. Congress Did Not Depart From The Settled Burden-
`Shifting Framework Here ............................................................... 55
`
`III. THE COMMISSION LACKS STATUTORY AUTHORITY TO
`REGULATE ENTITIES OTHER THAN INTERNET
`SERVICE PROVIDERS ........................................................................... 58
`
`A.
`
`B.
`
`The Statutory Text And Structure Restrict The
`Commission To Regulating ISPs .................................................... 58
`
`The Major-Questions Doctrine Confirms That The
`Commission Lacks Authority To Regulate Non-ISPs ................. 62
`
`IV. THE COMMISSION LACKS STATUTORY AUTHORITY
`FOR THE FULL SUITE OF ENFORCEMENT
`MECHANISMS IT CLAIMS ................................................................... 65
`
`A.
`
`Section 60506 Does Not Authorize Monetary Penalties .............. 65
`
`Appellate Case: 24-1179 Page: 10 Date Filed: 04/24/2024 Entry ID: 5386642
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`

`
`
`B.
`
`The Commission’s Counterarguments Lack Merit ...................... 69
`
`V.
`
`THE ORDER IS ARBITRARY AND CAPRICIOUS .......................... 72
`
`A.
`
`B.
`
`The Commission Failed To Explain Its Departure
`From The Standard Disparate-Impact Framework .................... 72
`
`The Commission Did Not Consider The Rule’s Full
`Costs Or Justify Its Coverage ......................................................... 73
`
`CONCLUSION...................................................................................................... 76
`
`
`
`
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`viii
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`

`

`
`
`Cases
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Alabama Ass’n of Realtors v. HHS,
`594 U.S. 758 (2021) ................................................................................ 46, 52, 64
`
`Albemarle Paper Co. v. Moody,
`422 U.S. 405 (1975) ............................................................................................ 53
`
`AMG Cap. Mgmt., LLC v. FTC,
`593 U.S. 67 (2021) .................................................................................... 6, 66, 71
`
`Babb v. Wilkie,
`589 U.S. 399 (2020) ............................................................................................ 24
`
`Biden v. Nebraska,
`143 S. Ct. 2355 (2023) .............................................................................. passim
`
`Boykin v. Bank of Am. Corp.,
`162 Fed. Appx. 837 (11th Cir. 2005) ................................................................ 56
`
`Brnovich v. Democratic Nat’l Comm.,
`141 S. Ct. 2321 (2021) ....................................................................................... 31
`
`BST Holdings, LLC v. OSHA,
`17 F.4th 604 (2021) ............................................................................................ 49
`
`Burlington N. & Santa Fe Ry. Co. v. White,
`548 U.S. 53 (2006) .............................................................................................. 25
`
`Chamber of Commerce of the U.S.A. v. CFPB,
`2023 WL 5835951 (E.D. Tex. Sept. 8, 2023) ................................................... 50
`
`Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
`467 U.S. 837 (1984) ............................................................................................ 34
`
`Chisom v. Roemer,
`501 U.S. 380 (1991) ............................................................................................ 36
`
`
`
`ix
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`

`

`
`
`Comcast Corp. v. FCC,
`600 F.3d 642 (D.C. Cir. 2010)........................................................................... 71
`
`Commissioner v. Keystone Consol. Indus., Inc.,
`508 U.S. 152 (1993) ............................................................................................ 55
`
`Doe v. BlueCross BlueShield of Tenn., Inc.,
`926 F.3d 235 (6th Cir. 2019) ............................................................................ 29
`
`EchoStar Satellite LLC v. FCC,
`704 F.3d 992 (D.C. Cir. 2013)........................................................................... 71
`
`FCC v. American Broad. Co.,
`347 U.S. 284 (1954) ............................................................................................ 68
`
`FCC v. Fox Television Stations, Inc.,
`556 U.S. 502 (2009) ............................................................................................ 73
`
`FCC v. Prometheus Radio Project,
`592 U.S. 414 (2021) .................................................................................. 7, 21, 72
`
`Griggs v. Duke Power Co.,
`401 U.S. 424 (1971) ................................................................................ 27, 28, 36
`
`ICC v. American Trucking Ass’ns,
`467 U.S. 354 (1984) ...................................................................................... 21, 67
`
`International Bhd. of Teamsters v. United States,
`431 U.S. 324 (1977) ............................................................................................ 26
`
`Jackson v. Birmingham Bd. of Educ.,
`544 U.S. 167 (2005) ............................................................................................ 24
`
`Koons Buick Pontiac GMC, Inc. v. Nigh,
`543 U.S. 50 (2004) .............................................................................................. 36
`
`Lamie v. United States Tr.,
`540 U.S. 526 (2004) ............................................................................................ 34
`
` Louisiana v. EPA,
`2024 WL 250798 (W.D. La. Jan. 23, 2024) ..................................................... 51
`
`
`
`x
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`
`
`Marx v. General Revenue Corp.,
`568 U.S. 371 (2013) ............................................................................................ 34
`
`Mayor of Baltimore v. Azar,
`973 F.3d 258 (4th Cir. 2020) ............................................................................. 75
`
`MCI Telecomms. Corp. v. AT&T,
`512 U.S. 218 (1994) ............................................................................................ 48
`
`Meacham v. Knolls Atomic Power Lab’y,
`554 U.S. 84 (2008) .......................................................................................... 6, 54
`
`Midatlantic Nat’l Bank v. New Jersey Dep’t of Env’t Prot.,
`474 U.S. 494 (1986) ............................................................................................ 55
`
`Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co.
`463 U.S. 29 (1983) ............................................................................................. 73
`
`Murray v. UBS Sec., Inc.,
`601 U.S. 23 (2024) .......................................................................................... 6, 25
`
`Newport News Shipbuilding & Dry Dock Co. v. EEOC,
`462 U.S. 669 (1983) ............................................................................................ 25
`
`NFIB v. OSHA,
`595 U.S. 109 (2022) ...................................................................................... 47, 49
`
`SEC v. Graham,
`823 F.3d 1357 (11th Cir. 2016) ......................................................................... 68
`
`Smith v. City of Jackson,
`544 U.S. 228 (2005) ................................................................................... passim
`
`Texas Dep’t of Hous. & Cmty. Affs. v. Inclusive Communities
`Project, Inc.,
`576 U.S. 519 (2015) ................................................................................... passim
`
`United States v. Adler,
`590 F.3d 581 (8th Cir. 2009) ............................................................................. 41
`
`United States v. Philip Morris USA, Inc.,
`396 F.3d 1190 (D.C. Cir. 2005) ..................................................................... 6, 68
`xi
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`
`
`University of Tex. Sw. Med. Ctr. v. Nassar,
`570 U.S. 338 (2013) ............................................................................................ 25
`
`Utility Air Regul. Grp. v. EPA,
`573 U.S. 302 (2014) ................................................................................... passim
`
`Van Buren v. United States,
`593 U.S. 1648 (2021) .......................................................................................... 38
`
`Verizon v. FCC,
`740 F.3d 623 (D.C. Cir. 2014)........................................................................... 45
`
`Watson v. Fort Worth Bank & Tr.,
`487 U.S. 977 (1988) ............................................................................................ 56
`
`West Virginia v. EPA,
`597 U.S. 697 (2022) ................................................................................... passim
`
`Whitman v. American Trucking Ass’ns,
`531 U.S. 457 (2001) ............................................................................................ 46
`
`Statutes
`
`5 U.S.C. § 706 ................................................................................................... 22, 72
`
`28 U.S.C.
`
`§ 2342 .................................................................................................................... 5
`
`§ 2344 .................................................................................................................... 5
`
`29 U.S.C. § 3248 ..................................................................................................... 38
`
`42 U.S.C.
`
`§ 2000e ............................................................................................................ 6, 54
`
`§ 9849 .................................................................................................................. 38
`
`§ 12112 ................................................................................................................ 26
`
`§ 18116 ............................................................................................................... 38
`
`47 U.S.C.
`
`§ 151 .................................................................................................................... 63
`§ 153 .................................................................................................................... 44
`§ 154 ................................................................................................................ 6, 71
`xii
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`
`
`
`
`
`
`
`
`
`§ 201 .................................................................................................................... 44
`§ 203 .................................................................................................................... 44
`§ 254 .................................................................................................................... 70
`§ 402 ...................................................................................................................... 5
`§ 405 ...................................................................................................................... 5
`§ 503 ................................................................................................................ 6, 66
`§ 1754 ......................................................................................................... passim
`
`49 U.S.C. § 40127 ................................................................................................... 38
`
`American Recovery and Reinvestment Act of 2009,
`Pub. L. No. 111-5, 123 Stat. 516 ........................................................................ 7
`
`Infrastructure Investment and Jobs Act,
`Pub. L. No. 117-58, 135 Stat. 429 ........................................................... passim
`
`Regulatory Materials
`
`47 C.F.R.
`
`§ 1.4 ....................................................................................................................... 5
`§ 16.2 .......................................................................................................... passim
`
`
`§ 16.3 ................................................................................................................... 12
`§ 16.5 ............................................................................................................. 55, 56
`
`
`Fourteenth Broadband Deployment Report,
`FCC 21-18, GN Docket No. 20-269 (Jan. 19, 2021) ......................................... 8
`
`In re Improving Competitive Broadband Access to Multiple
`Tenant Environments,
`37 FCC Rcd. 2448 (2022) .................................................................................. 61
`
`In re Promotion of Competitive Networks in Local
`Telecommunications Markets,
`23 FCC Rcd. 5385 (2008) .................................................................................. 63
`
`In re Protecting & Promoting the Open Internet,
`30 FCC Rcd. 5601 (2015) .................................................................................. 45
`
`Safeguarding and Securing the Open Internet,
`88 Fed. Reg. 76048 (Nov. 3, 2023) ................................................................... 46
`
`
`
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`

`

`
`
`2024 Section 706 Report,
`FCC 24-27, GN Docket No. 22-270 (Mar. 18, 2024) ........................................ 9
`
`Other Authorities
`
`Samuel R. Bagenstos, Bottlenecks and Antidiscrimination
`Theory: A New Theory of Equal Opportunity,
`93 Tex. L. Rev. 415 (2014) ................................................................................ 50
`
`
`
`Black’s Law Dictionary (11th ed. 2019) .............................................................. 67
`
`FCC, Connecting America: The National Broadband Plan
`(2010) .................................................................................................................... 8
`
`FCC, FCC to Vote on Restoring Net Neutrality (Apr. 3, 2024),
`https://www.fcc.gov/document/fcc-vote-restoring-net-
`neutrality ........................................................................................................... 46
`
`Laura Meckler & Devlin Barrett, Trump Administration
`Considers Rollback of Anti-Discrimination Rules,
`Wash. Post (Jan. 3, 2019) ................................................................................. 50
`
`Merriam-Webster’s Collegiate Dictionary (11th ed. 2019) .............................. 67
`
`We Are Apartments, National Data: Apartment Homes,
` https://weareapartments.org/data/ ................................................................. 62
`
`Michael Selmi, Was the Disparate Impact Theory a Mistake?,
`53 UCLA L. Rev. 701 (2006) ............................................................................ 50
`
`USTelecom, 2022 Broadband Capex Report (Sept. 8, 2023),
`https://utelecom.org/research/2022-broadband-capex ............................. 8, 49
`
`Webster’s New World College Dictionary (5th ed. 2016) .................................. 24
`
`White House, Affordable Connectivity Program Enrollment
`Fact Sheets,
`https://www.whitehouse.gov/build/resources/affordable-
`connectivity-program-enrollment-fact-sheets .............................................. 10
`
`
`
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`

`

`
`
`INTRODUCTION
`
`In late 2021, a bipartisan group in Congress passed the Infrastructure
`
`Investment and Jobs Act (IIJA). The IIJA authorized $1.2 trillion in
`
`infrastructure spending, including $65 billion for high-speed internet, or
`
`“broadband.” Tucked into that 1,000-page statute, at the end of a 70-page
`
`section addressing broadband, is a single paragraph requiring the Federal
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`Communications Commission
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`to
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`adopt
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`rules
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`“preventing digital
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`discrimination of access based on income level, race, ethnicity, color, religion,
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`or national origin.” Pub. L. No. 117-58, § 60506(b)(1), 135 Stat. 429, 1246. That
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`paragraph generated zero legislative history or political debate.
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`Section 60506 should have been as unremarkable as
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`it was
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`uncontroversial. After all, Congress frequently requires that recipients of
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`federal funds avoid intentional discrimination, and Congress had just
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`earmarked billions of dollars to support internet service providers (ISPs) in
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`building out broadband. Given those partnerships with ISPs, it is unsurprising
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`that Congress wanted to prohibit them from intentionally discriminating
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`among their current or prospective customers.
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`The Commission, however, issued a rule that rewrites the statute to do
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`something much more unusual—indeed, unprecedented. In the Commission’s
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`Appellate Case: 24-1179 Page: 18 Date Filed: 04/24/2024 Entry ID: 5386642
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`view, Section 60506 authorizes it to forbid any entity from engaging in any
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`business practice that has a disparate impact on broadband access based on
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`the listed characteristics, including “income level.” According to the
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`Commission, Congress did not just ensure that its partners do not
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`intentionally discriminate; it created a first-of-its-kind regime requiring
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`scrutiny of common business practices for their differential effect on
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`customers of varying income levels. And Congress supposedly did so without
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`a word in the statute about disparate impact or a single line of debate.
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`The Commission’s theory is not plausible. Start with the words
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`Congress chose: “digital discrimination” “based on” protected characteristics.
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`As the Supreme Court has repeatedly made clear, that is hallmark disparate-
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`treatment language focused on intentional discrimination. By contrast,
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`Section 60506 contains none of the outcome-focused language that the Court
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`has previously (if rarely) interpreted to authorize disparate-impact liability.
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`No legislator with even a passing familiarity with the Supreme Court’s
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`decisions would have chosen the language of Section 60506 to create a
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`disparate-impact regime for broadband access.
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`More generally, disparate-impact liability is not something that
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`Congress slips into laws with oblique language and no fanfare. The Supreme
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`Appellate Case: 24-1179 Page: 19 Date Filed: 04/24/2024 Entry ID: 5386642
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`Court has cautioned that, without robust safeguards, disparate-impact liability
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`threatens to “undermine . . . the free market system” itself. Texas Dep’t of
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`Hous. & Cmty. Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519, 544
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`(2015). That threat is particularly stark here, because interpreting Section
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`60506 to cover disparate impacts based on “income level” would throw into
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`doubt all manner of standard business practices, including pricing decisions,
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`credit checks, and marketing campaigns—all of which could affect high- and
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`low-income customers differently. It strains credulity for the Commission to
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`say that a bipartisan majority of Congress quietly subjected a wide swath of
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`the economy to a disparate-impact regime with such dramatic consequences,
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`in one brief paragraph of a 1,000-page omnibus infrastructure law. At a
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`minimum, the Commission cannot show that Congress clearly authorized
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`disparate-impact liability in Section 60506. See West Virginia v. EPA,
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`597 U.S. 697, 723 (2022).
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`Nor did the Commission stop at creating an atextual disparate-impact
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`regime. It also developed an unprecedented disparate-impact framework that
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`is particularly prejudicial to defendants. In the rare contexts where the
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`Supreme Court has recognized disparate-impact claims, it has required a
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`particular burden-shifting framework. Under that framework, a defendant
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`Appellate Case: 24-1179 Page: 20 Date Filed: 04/24/2024 Entry ID: 5386642
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`can defeat a claim if it can show that the policy causing a disparity is
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`“necessary to achieve a valid interest.” Inclusive Communities, 576 U.S. at
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`541. But the Commission’s rule recognizes only a much narrower version of
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`this defense. And while the Inclusive Communities framework shifts the
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`burden back to plaintiffs to offer a feasible alternative practice that would not
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`cause a disparate impact, the Commission keeps the burden squarely on the
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`defendant. No disparate-impact regime has ever functioned that way.
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`The Commission’s rule is unlawful in at least two other respects. First,
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`the rule’s sweeping defini