As the country reels from a presidential debate that left no one looking good, the Supreme Court has delivered what could be one of the most consequential decisions it has ever made in the context of the tech industry. By overturning a 40-year-old decision, the court has opened the door to endless interference from industry and the whims of out-of-touch justices.
The Supreme Court announced Friday morning that it had ruled by a vote of 6 to 3 (you know who voted how) to overturn Chevron v. Natural Resources Defense Council, a 1984 case that established a very important principle in federal regulation.
Federal law is necessarily broad, applying to many jurisdictions. Moreover, some laws remain in effect for decades without being amended. Thus, the drafting of every law—just like the Constitution—requires interpretation, a task shared by all parties in the legal system, from lawyers to judges to arbitrators. Amici curae.
The 1984 Chevron decision stated that independent agencies such as the Environmental Protection Agency, the Securities and Exchange Commission, and the Federal Communications Commission also had a say in the matter. In fact, the decision found that in cases where the law is ambiguous, courts should defer to these agencies as experts in their fields.
For example, consider something like the Clean Water Act, which provides specific legal protections for wetlands. Who determines whether a piece of land is a wetland? Interested parties such as heavy industry or conservation groups cannot determine whether they are interested, because their interpretations are likely to be conflicting. And what are the chances that the judge who will take the case will have any expertise on the matter? Instead, in such cases, the Environmental Protection Agency, which includes experts who are not interested in wetlands, is empowered to resolve the ambiguity.
So, what do wetlands and the EPA have to do with technology? Well, who do you think defines “encryption” in law, or “communications,” or “search and seizure,” or “reasonable expectation of privacy”?
The entire concept of net neutrality rests on the FCC’s interpretation of whether broadband data is an “information service” or a “telecommunications service,” the terms written into the law that gives that agency the authority.
If the FCC isn’t empowered to settle this mystery in a very old law that was written before today’s broadband and mobile networks existed, then who is? Whichever court will hear the case brought by the telecom industry, which abhors net neutrality and favors an interpretation that the FCC does not regulate at all. And if the industry doesn’t like that court’s interpretation, it gets more shots as the case goes toward — oh, the Supreme Court.
Interestingly, as Justice Elena Kagan noted (As reported by court reporter Amy Howe,), that in “one fell swoop” the court granted itself “exclusive jurisdiction over every open issue—no matter how experience-driven or policy-laden—including the meaning of regulatory law.” In other words, the Supreme Court Dedicated herself The powers currently exercised by each regulatory body in the country.
Playing technology for time pays off.
But why is this so important to the tech sector? Because the tech industry is facing a wave of regulatory activity led by these agencies, which operate in a vacuum of congressional action. With no effective federal laws on technology, the agencies have had to step in and provide updated interpretations of the laws on the books.
Tech leaders have repeatedly called for federal laws — not agency regulations — to define and constrain their industries. They’re calling out: “Please, give us a federal privacy law! Pass a location data law! Pass a big, nice law on how to use artificial intelligence!”
They are well aware that Congress is almost unable to pass any such laws, in part because tech industry lobbyists quietly fight them in the background whenever a law with force is proposed. You will be shocked to discover that although it has been a decade or more since technology companies have been required to issue such laws, little or none of them have actually come into effect! When California passes a law like this, everyone laments: It’s not like any other law. whoThe folds are made with crossed fingers, just for optics.
Let’s be optimistic for once and imagine that Congress passes a big law on AI, protecting certain information, requiring certain disclosures, etc. It’s impossible for such a law to contain any ambiguity or intentional vagueness that would allow the law to apply to as-yet-unknown cases or applications. Thanks to the Supreme Court, experts will no longer be able to solve these ambiguities.
(As an example of how this might play out, in the same decision issued today, Justice Gorsuch repeatedly referred to nitrogen oxide, one of the pollutants under consideration, as nitrous oxide, or laughing gas. That’s the level of expertise we might expect.)
Every law has ambiguity. At the technology frontier, ambiguity becomes more common, as there is no precedent and lawmakers do not understand the technical issues.
So, looking to the future, who defines “AI,” “scraping,” “personal information,” or “invasive”? Yesterday, it might have been the FCC or FTC that, with its experts on technology, industry, markets, etc., would have made an informed decision and perhaps even solicited public opinion, as they often do in rulemaking processes. Today, it will be the judge in whichever state the industry decides has the friendliest or most gullible bench.
As Kagan argued, Summary again by Howe:
Kagan cited a hypothetical bill to regulate AI as one example. Congress “knows there will be gaps because it’s hard to see Congress a week into the future,” she said. So she wants people “who actually know about AI and are accountable to the policy process to make the decisions” about AI. She stressed that the courts “don’t even know what the questions about AI are,” let alone the answers.
This decision is arguably the single most significant deregulatory measure that could be taken, and as we have all seen, without regulation, tech companies—like every other major industry—will consolidate and exploit. The next few years, even under a pro-regulation Democratic administration, will be a free-for-all. There is no impediment, and perhaps no downside, to industry lawyers challenging every regulatory decision in court and demanding a more favorable interpretation of the law.
We are entering a climate that is favorable to large companies that were once more likely to face regulatory scrutiny—and are now less likely to be exposed for bad behavior, as “bad” can be redefined by the jurisdiction of their choice.
But chaos favors the skilled and intelligent, and major technology companies have proven slow to respond when faced with technology capable of turning the industry upside down (or so they believe), such as artificial intelligence. There is an opportunity here, frankly, for those who have the money and ambition but are unencumbered by certain ethical principles, to explore new approaches and business models that may have attracted regulatory attention before.
If you think you’ve been exploited before, you haven’t seen anything yet.