Federal Court Vacates FCC's Disparate Impact Rule

The U.S. Court of Appeals for the Eighth Circuit has issued a decision striking down the FCC's disparate impact rule.

The FCC released a Report and Order and Further Notice of Proposed Rulemaking in November 2023 that adopted a final digital discrimination rule, portions of which were challenged by Industry and Public Interest Petitioners.

The FCC’s digital discrimination rule (47 CFR §§ 16.1-16.7) adopted two theories of liability – disparate treatment (that is, intentional discrimination) and disparate impact (that is, discriminatory effects). The rule made it unlawful for covered entities to adopt or use policies or practices that differentially impact consumers' access to broadband based on specified protected characteristics. The rule also defined covered entities broadly to include not only broadband providers but also other entities that facilitate and affect consumer access to broadband.

The Eighth Circuit Court of Appeals held that the Infrastructure Investment and Jobs Act of 2021 (IIJA) did not authorize the FCC to impose disparate impact liability, and struck down that core aspect of the rule. The Court also held the FCC exceeded its statutory authority by extending the rule beyond broadband providers to a broad universe of other entities. Furthermore, the Court determined that, under the Major Questions Doctrine, the rule lacked the required Congressional authorization. Because these issues went to the core of the 2023 final rule, the Court vacated the rule in its entirety.

While the FCC’s disparate treatment rule was not challenged and remains in place, the disparate impact rule was overturned. The FCC is unlikely to impose a different disparate impact rule or move forward on the November 2023 Further Notice of Proposed Rulemaking under Chairman Brendan Carr, as evidenced by Carr’s statement applauding the Court’s decision.

If you have questions about the FCC’s digital discrimination rule, contact Steve Coran in our Broadband, Spectrum, and Communications Infrastructure Practice Group.