[Guest post by Aaron Worthing; if you have tips, please send them here.]
So the FCC has decided today to promulgate something called net neutrality. I will admit I find the concept to be a solution in search of a problem. It is exceedingly rare that the problems they cite, of network providers cutting off services like Netflix and the like to harm their competitors, even happens. Shouldn’t we wait for this to turn into a real problem before we even think of regulating it?
But in general the Obama administration has taken the attitude that pretty much everyone and everything should be subject to regulation. This is what I call “Democratic Totalitarianism.”
Let me give you a concrete example. My industry (health care) and every lawyer in this country has been struggling to deal with the issue of the Red Flags rules. These rules say that every single creditor has a legal duty to make sure his debtors are actually who they say they are. If identify theft occurs, then the creditors are liable to the real persons being impersonated for any damages caused by this undetected identity theft.
That sounds reasonable (although debatable as policy), until you learn how broad the FTC’s definition of “creditor” was. A “creditor,” of course, is a “person” (including artificial persons like corporations) who extended credit on a regular basis. And what is “credit?” According to the FTC it included any delay between rendering a good and service and collecting on it. From the FTC’s February 4, 2009 letter:
[T]he FTC staff believes that professionals, including physicians, who regularly bill their clients, customers, or patients for their services after those services are rendered, are “creditors” under the ECOA.
Now stop and think about that for a moment. If any delay between the service provided and payment makes you a creditor, well, then who isn’t covered by that? Who isn’t a creditor under this interpretation of the statute? Any person who gets paid on a semi-monthly or bi-weekly basis is a creditor.
Well, fortunately Judge Walton, in the U.S. District Court for the District of Columbia didn’t agree:
Judge Reggie Walton said he had trouble accepting the FTC’s definition of a creditor. He said that under their interpretation, a plumber who charges a customer after working on a toilet for two days would be also be considered a “creditor.”
And so Walton went on to rule against the FTC. And anyone who reads the court’s opinion will quickly see how far off the reservation the court had gone in this matter. Since then the case has been affirmed on appeal and Congress passed a law overruling the FTC, thank God. But this is the needless chaos the Obama administration has inflicted upon us.
So let’s return back to the example of the FCC and the net neutrality thing. Now never mind that the Supreme Court has cast serious doubt on the ability of the Congress to pass laws regulating this kind of activity, as a matter of law it looks even grimmer than that. They were told specifically by the D.C. Circuit that Congress did not even give them the authority to do this. You can read the opinion, here. So even if it was constitutional, they still couldn’t do it.
So what this action is, is saying to the D.C. Circuit, “we don’t care what you think, we are going to do it anyway.” It is a spit in the face. Shouldn’t they have settle the issue of whether they could do this before trying to do this?
I won’t comment on the substantive issue, because I have not read the regulation at issue. Even if it is as benign as its advocates say, I fear this will be the nose under the camel’s tent. Right now, I am much more afraid of the government than Comcast.
And I want to pause and say something about the headlines on this. For instance, in my linked story it says: FCC Gives Government Power to Regulate Web Traffic. Well, excuse me a second, but the FCC can’t give the government any power. The people give the government power, and the government gives that power to the FCC, not the other way around. And how many times did people say that the FCC “passes” net neutrality? Congress passes laws. The FCC promulgates regulations. But what we are seeing in the very creepy tendency in the use of our language to suggest that somehow the administrative state is greater than Congress. The tail is wagging the dog.
Update: Thanks to a prompt from JD, I learn that even if I wanted to, I couldn’t comment on the order because no one has seen it outside of the FCC. Well, that certainly increases my confidence that this is a good idea. Btw, you can read the proposed orders, which might or might not look anything like the final order, here. Just chug some caffeine before you try.
[Posted and authored by Aaron Worthing.]