"If you've got Justice Anthony Kennedy on your side, you can pretty much do what you want. Without him, you're the author of an angry dissent," reports The AP's Mark Sherman.

Some fear "huge openings" for foreign corporations to sway elections.

Prof. Nate Persily asks, "What will the Supreme Court's campaign finance ruling really change?"

Possible legislative responses are assessed at SCOTUSblog.

"Money isn't speech, and corporations aren't people," says Prof. David Kairys.

Judging the Environment is collecting scores of op-eds from across the country here.

[Image via TheBronze Blog.]

The citizens of Minot, North Dakota suffered a grave injustice on January 18, 2002 when a train derailment bathed much of that small town in a toxic cloud of poisonous gas that killed one person and injured almost 1,500 others. A detailed investigation by the National Transportation Safety Board concluded that the derailment was most likely caused by fractures in temporary joints that the railroad had installed to repair the track.

When the victims sued the railroad for damages caused by its negligent maintenance, they found the courthouse doors locked. A federal district court held that their claims were preempted by the Federal Railroad Safety Act (FRSA) of 1970, which contained a "preemption" clause that Congress enacted to prevent states and localities from enacting regulations that were inconsistent with the regulations issued by the Federal Railroad Administration (FRA), the federal agency that Congress created to protect citizens from irresponsible railroads.

The court held that because Congress empowered the FRA to regulate railroad safety, injured citizens could not sue the railroads when they operated their trains unsafely -- whether or not they complied with FRA requirements. Other courts have issued similar decisions in cases involving train collisions, derailments and grade-crossing accidents.

During the Bush Administration, the FRA aggressively asserted its newfound power to protect railroads by preempting state common law. A new white paper issued by the Center for Progressive Reform (which I co-authored) explores the injustice inherent in this interpretation of the statute.

Proponents of preemption argue that the FRA is fully capable of protecting U.S. citizens without the help of juries applying vague common law standards to reach potentially inconsistent results in 50 different jurisdictions. The citizens of Minot know that's not true.

The 400 inspectors working for the Federal Railroad Administration are responsible for 1.2 million rail cars operating on nearly 300,000 miles of track. In 2003, the FRA fully investigated only four of the nearly 3,000 grade-crossing accidents that occurred and imposed fines for only about 2 percent of the violations it discovered. The agency's solution to its resource problem is to rely heavily upon the railroads themselves to inspect rolling stock and track for compliance with FRA safety regulations. That puts the fox firmly in charge of the henhouse, with predictable results.

The CPR report documents how the FRA has long been thoroughly "captured" by the industry it is supposed to be regulating. High-level agency officials and industry lawyers and executives move seamlessly through the agency's rapidly revolving door.

The notion that common law is unnecessary because the FRA does such a splendid job of guarding public safety is thus a cruel joke. The victims of irresponsible railroad behavior and their families have suffered in silence. And those of us who live near railroads or frequently encounter railroad crossings are at the mercy of railroad companies that know full-well that they are unlikely to be called to account by a resource-starved federal agency.

Congress reacted to this obvious injustice in 2007 by adding a proviso to the preemption section of the FRSA stating that it did not block citizens seeking damages in cases where the plaintiff alleged that the railroad had failed to comply with a federal standard, one of its own rules, or valid state law. This specific injunction should have sent a message to the FRA and the federal courts that they were to get out of the business of preempting state common law claims when the railroad violated valid state or federal requirements or one of its own safety regulations. Yet, an FRA regulation, issued in April 2008, stated that the amendment merely established "rare" exceptions to the general rule that state common law claims were preempted.

And in the early months of the Obama administration, when the president had not yet appointed the agency's new leaders, FRA continued to write broad preemption language in the preambles to its rules. Several lower court decisions have likewise narrowly limited the amendment and have continued to hold that valid common law claims are preempted. Last May, President Obama issued a memorandum to the agencies instructing them to preempt state common law only when they have a legal basis for doing so and only when the preemption satisfies the requirements of Executive Order 13132, which expresses a policy of respect for the authority of the state agencies and courts to regulate and adjudicate.

The FRA should heed the president's orders. And it should send a message to the courts by recanting previous preemption statements, repealing language in existing regulations preempting state common law claims, including provisions in future rules preserving state common law claims, and sending amicus briefs -- vigorously defending the right of plaintiffs to sue irresponsible railroads -- to courts that are asked to dismiss cases on preemption grounds. Our safety deserves no less.

[Image via Wade From Oklahoma.]

In his weekly address, President Barack Obama took aim at the Supreme Court's recent decision in Citizens United v. FEC, which, he said, "overturned more than a century of law." To "repair the damage that has been done," the president indicated that, as soon as the ruling was announced, he instructed his administration to work with legislators from both parties in developing a forceful response to the decision.

"This ruling opens the floodgates for an unlimited amount of special interest money into our democracy" President Obama stated. "It gives the special interest lobbyists new leverage to spend millions on adverstising to persuade elected officials to vote their way, or to punish those who don't."

Goddess of the Market

Ayn Rand and the American Right

By Jennifer Burns

[Available Here]

Of all the second acts in American lives, perhaps none is more remarkable than the recent conservative embrace of Ayn Rand, the long-dead doyenne of American capitalism. During the market nosedive of 2008 it seemed her version of free market capitalism had been discredited altogether; even former acolyte Alan Greenspan had his doubts, famously telling Congress he had found "a flaw" in his Rand-inspired ideology. Yet in 2009 sales of her books began a ferocious climb, with Atlas Shrugged alone selling more than 300,000 copies. Signs referencing her hero John Galt dotted the tea party protests, and she's been a staple of right wing talk radio and a new favorite of rising stars like Glen Beck. On the campaign trail, candidate Obama would sometimes criticize the virtue of selfishness, making a veiled allusion to Rand's ideas. Now President Obama has wrestled firsthand with the virtue of selfishness, for it is Rand's ideas that have undergirded conservative response to his economic proposals from the auto bailout to health care reform. Nor is she likely to fade away anytime soon; the Washington Post just declared Randroids "in" for 2010.

Though Rand's newfound popularity may have caught liberals and progressives by surprise, my book Goddess of the Market: Ayn Rand and the American Right, shows that Rand has always been a staple of political thought on the right. As I describe in the book, her ideas become especially prominent in eras of liberal dominance. She first caught the eye of business conservatives when she worked as a volunteer for Wendell Willkie's 1940 presidential run against Franklin Roosevelt, and she inspired legions of young volunteers who campaigned for Republican contender Barry Goldwater in 1964. The same cycle continues today, as the presidency of Barack Obama has energized and outraged his conservative opposition.

Ayn Rand was born Alissa Rosenbaum in 1905 in St. Petersburg, Russia. When she was twelve, Bolshevik revolutionaries seized her father's chemistry shop, an experience that left young Alissa with a bitter hatred of government and an abiding suspicion of any collective action justified in the name of social good. In 1926 she left Russia for America, where she changed her name and embarked on a remarkable career as a screenwriter, playwright, novelist, and political activist. She developed a Nietzschian-style philosophy of ethical selfishness, holding that traditional values like altruism lay at the root of totalitarian systems such as communism, socialism, and fascism. Rand called her mature philosophy "Objectivism," and it proved wildly popular among college students in the 1960s. Objectivism helped inspire the Libertarian Party, the Cato Institute, and Reason magazine.

Today, Rand's best known work is her politically charged 1957 novel Atlas Shrugged. The 1,084 page book is set in a future dystopian America, where overbearing government regulation and taxation have strangled the economy. In response, the country's top capitalists have gone "on strike," heroically refusing to work for an exploitative system that redistributes their wealth to the needy. Ever since it was published more than 50 years ago, readers have hailed the work as prophecy, seeing in Rand's villains the dim outline of liberal presidents from Lyndon Baines Johnson to Jimmy Carter.

This understanding of Rand as prophetess is widespread on the right today. "Read Atlas Shrugged before it happens" warned a sign at last spring's tea parties. Or as Rush Limbaugh put it: "Ayn Rand, she wrote ‘Atlas Shrugged.' The sequel: ‘Atlas Puked.' We're in the middle of it."

What's different now is that for the first time, conservatives are willing to overlook Rand's once-controversial atheism. Rand's materialistic philosophy is pivotal to her attack upon government, as both she and an earlier generation of conservatives understood. William F. Buckley, Jr., the founder of National Review and himself an avid fan of capitalism, tried to run Rand out of the conservative movement because she was an atheist. He rightly perceived her work as not just as a defense of capitalism, but an attack upon Christianity itself. For Buckley and other traditional conservatives, government charity might be wrong, but charity itself was to be applauded. That Rand criticized Christian morality made her anathema to believers like Whittaker Chambers, who wrote the message of Atlas Shrugged was "to a gas chamber - go!"

What matters most to Rand's latter day conservative followers, however, is how vividly Rand makes the case that government intervention in the economy and social welfare programs are morally wrong. In a clever sleight of hand, Rand's ideas have helped conservatives shift the terms of debate from the causes of the economic crisis to the Obama administration's proposed solutions. She offers a secular version of saints and sinners, for in Rand's world, there are two types of people: producers and looters, or those who work for themselves, and those who work for the government. It's the original version of Richard Nixon's "silent majority" or Sarah Palin's "real Americans."

Rand's acceptance into the pantheon of conservative thinkers is a sign that the libertarian wing of the movement is gaining strength as economic issues move to the fore of American politics. And though liberals expected that the market crash would discredit libertarian economics altogether, Rand's prominence signifies that the ideal of unregulated capitalism itself is becoming more firmly welded to the conservative world view. Whether Rand's popularity lasts into the new decade remains to be seen. But if the history I describe in Goddess of the Market is any guide, Rand and her ideas will be with us for many political cycles to come.

For those concerned about special-interest spending in elections, today's Citizens United ruling was an unmistakable setback. This ruling pours gasoline on an already raging bonfire that will affect all federal and state elections. And it will pose an especially grave threat to the integrity of elected state courts.

But today's Citizens United ruling does have a silver lining: it explicitly says that corporations that pay to play in elections can be forced to disclose their financial sources. Companies running so-called independent campaigns can literally spend infinite amounts. But they do not have a constitutional right to do so anonymously.

The ruling thus gives clear guidance to state and federal lawmakers that they can pass disclosure laws, to provide desperately needed sunlight in a new era of runaway election spending. Moreover, it is a hopeful sign that First Amendment attacks, which have been used as a battering ram against legitimate election laws, may have reached their upper limit with the Citizens United case.

In today's ruling, the U.S. Supreme Court said businesses can spend directly from their treasuries on federal elections-a ruling that could unleash a tsunami of campaign cash. And that's clearly just the beginning. As quickly as they can be cranked out, new lawsuits will demand equal rights for unions-and for spending on state and local elections, not just federal campaigns.

It's easy to imagine where this will lead, especially for those who focus on the specialized area of judicial elections.

Just last year, the Supreme Court faced all the potential worst-case scenarios when it issued a landmark ruling in Caperton v. Massey. In that case, a coal executive spent $3 million to elect a new justice to West Virginia's high court, as his company sought to overturn a $50 million jury award.

The U.S. Supreme Court forced the judge off the case, but it got a powerful sneak preview of what Citizens United could spawn. Remarkably, the money spent in the West Virginia election all came out of the executive's private finances. Now it's likely that he and other CEOs, as well as union chiefs, will ultimately turn business treasuries into personal election-campaign piggy banks.

Justice John Paul Stevens clearly had the Caperton case in mind when he wrote the following in his eloquent dissent:

The consequences of today's holding will not be limited to the legislative or executive context. The majority of the States select their judges through popular elections. At a time when concerns about the conduct of judicial elections have reached a fever pitch, see, e.g., O'Connor, Justice for Sale, Wall St. Journal, Nov. 15, 2007, p. A25; Brief for Justice at Stake et al. as Amici Curiae 2, the Court today unleashes the floodgates of corporate and union general treasury spending in these races. Perhaps "Caperton motions" will catch some of the worst abuses. This will be small comfort to those States that, after today, may no longer have the ability to place modest limits on corporate electioneering even if they believe such limits to be critical to maintaining the integrity of their judicial systems.

Given the historic purpose of campaign finance laws -- to prevent large concentrations of money from corrupting officials and undermining public trust in government -- that's hardly an inspiring prospect. And it might have been avoided had the court decided only the original question, of whether federal election law should apply to a video-on-demand documentary that criticized a presidential candidate.

So where are the silver linings in Citizens United v. Federal Election Commission? Where are election reformers now that the ruling has been handed down?

The disclosure ruling is significant, and it potentially affects all elections, federal and state. While it struck down Austin v. Michigan Chamber of Commerce's 1990 ban on corporate spending, the Supreme Court reaffirmed multiple Supreme Court rulings that campaign disclosure laws are consistent with the First Amendment. The Roberts Court, which is skeptical of campaign regulation, upheld rulings dating back to Buckley v. Valeo in 1976, which found that disclosure of election spending provides vital public information and helps combat corruption. Significantly, this ruling covers expenditures by independent campaigns whose goal is to influence election outcomes.

Lawmakers can and should now move without any fear of meaningful litigation to start a new era of sunlight on special-interest spending in all elections. And these laws should specifically bring a public accounting to the many groups that have used "independent" ad campaigns to skirt reporting rules.

One also can hope that this vote will leak some air out of a First Amendment overreach that has besieged courts in recent years. Despite statements to the contrary, federal courts have upheld most campaign finance laws against First Amendment challenges, choosing only to carve out specific exceptions, such as the "millionaire's amendment" in Davis v. FEC.

With the Supreme Court now rejecting the simplistic argument that all forms of campaign regulation violate free-speech, perhaps courts everywhere will pause and look more skeptically at the continuing assault on public financing and other laws.

This is especially true in the area of court elections. A second silver lining recent years is that the Supreme Court and lower tribunals recognize that courts have special constitutional obligations, which must be weighed against free-speech claims. In Caperton, for instance, the court said there is no First Amendment right to the judge of one's choice. A citizen can support any candidate for the bench. But if he goes to court, the Fourteenth Amendment may, for due process and fairness, require that another judge hear the case. Justice Kennedy, in the majority opinion, reaffirmed that in Citizens United.

Similarly, the conservative Fourth Circuit of Appeals unanimously upheld North Carolina's public financing law for appellate court races. In its 2008 ruling in Duke v. Leake, which the Supreme Court declined to hear, the Fourth Circuit wrote: "The concern for promoting and protecting the impartiality and independence of the judiciary ... dates back at least to our nation's founding," adding that the provisions "to protect this vital interest in an independent judiciary are within the limits placed on the state by the First Amendment."

Even if courts continue to chip away at specific campaign regulations, an argument can still be made that rulings such as Caperton and Duke v. Leake should provide a special protective shield around elections involving the courts.

No matter what, those who care about keeping courts impartial need to turn bad news into good news, by moving to enact real reforms-including disclosure, recusal, public financing and appointive systems - to make sure justice is not for sale.

[Image via HatCityBLOG.]

Today's Supreme Court decision in the Citizens United case is a disaster for the American people and a dark day for the Supreme Court.

The decision will unleash unprecedented amounts of corporate "influence-seeking" money on our elections and create unprecedented opportunities for corporate "influence-buying" corruption.

Today's decision is the most radical and destructive campaign finance decision in Supreme Court history. In order to reach the decision, five justices abandoned longstanding judicial principles, judicial precedents and judicial restraint.

With the Citizens United opinion, Chief Justice Roberts has abandoned the illusory public commitments he made to "judicial modesty" and "respect for precedent" to cast the deciding vote for a radical decision that profoundly undermines our democracy.

In a stark choice between the right of American citizens to a government free from "influence-buying" corruption and the economic and political interests of American corporations, five Supreme Court Justices today came down in favor of American corporations.

With a stroke of the pen, five Justices wiped out a century of American history devoted to preventing corporate corruption of our democracy.

The radical nature of today's decision can be seen in the fact that the Court is overruling cases decided in 1990, 2003 and 2007, without any changed circumstances to justify these abrupt reversals.

The only change that has occurred is a change in the makeup of the Court itself and that provides no justification for overturning past decisions.

The Supreme Court decision in Citizens United is wrong for the country, wrong for the Constitution and wrong for our democracy. It will not stand the test of time or history.

The Supreme Court majority has acted recklessly to free up corporations to use their immense, aggregate corporate wealth to flood federal elections and buy government influence. The Fortune 100 companies alone had combined revenues of $13 trillion and profits of $605 billion during the last election cycle.

Under today's decision, insurance companies, banks, drug companies, energy companies and the like will be free to each spend $5 million, $10 million or more of corporate funds to elect or defeat a federal candidate -- and thereby to buy influence over the candidate's positions on issues of economic importance to the companies.

Today's decision turns back the clock to the nineteenth century, eliminating a national policy to prevent the use of corporate wealth to corrupt government decisions -- a policy that has been in existence for more than a century.

Members of Congress have passed and Presidents have signed numerous laws over the years to prevent "influence-buying" corruption of our government. These laws have consistently been upheld by the Supreme Court.

Today, five Justices issued a decision that will empower "influence-buying" corruption.

In the name of the Constitution, five Justices have substituted their pro-corporate policy views for the anti-corruption policy views of the representatives elected by citizens to establish our national policies under our constitutional system of government.

This decision will have a devastating impact on the ability of citizens to believe that their government is acting on their behalf, instead of advancing the interests of the nation's corporations at their expense.

In the coming weeks, Congress should explore all possible legislative options to address the dangerous corruption problems opened up by the Supreme Court today.

The Citizens United decision reinforces the need to dramatically increase the role of citizens in financing our elections with small "non-influence seeking" contributions. This requires enacting legislation to repair the presidential public financing system and create a new system of congressional public financing, and to make small donors the key players in these systems by providing public funds to match small contributions. Democracy 21 strongly supports such legislation.

Ironically, the constitutionality of the corporate spending ban was never even raised by the plaintiffs in the lower court consideration of this case. Instead, the Justices, in essence, started the case themselves when, on their own, they ordered further briefing and argument on the constitutionality of the corporate spending ban.

Ignoring the longstanding judicial doctrine of constitutional avoidance, the Court majority has reached out to decide Citizens United on broad constitutional grounds rather than on the various narrower grounds that were available. If the Court had made its decision on any of these narrower grounds, it would not have disrupted more than a hundred years of national policy to prevent corporate "influence-buying" corruption.

A Washington Post Outlook piece by Bob Kaiser (September 9, 2009) quoted former Republican Senator Chuck Hagel on the enormous stakes involved in the Citizens United case:

Chuck Hagel, the Nebraska Republican who retired from the Senate last year after serving two terms, said in an interview that if restrictions on corporate money were lifted, "the lobbyists and operators . . . would run wild." Reversing the law would magnify corporate power in society and "be an astounding blow against good government, responsible government," Hagel said. "We would debase the system, so we would get to the point where we couldn't govern ourselves."

Justice Louis Brandeis, one of the nation's greatest Supreme Court Justices, once said "The most important political office is that of the private citizen." Today's Supreme Court decision rejects Justice Brandeis' view, raising corporations to new heights of importance and influence in our political system.

[Image via jtyerse.]

Goldman Sachs, the former bailed out investment bank, wastes too much of the corporate wad on lavish compensation arrangements. Notably, for instance, the company recently announced that it was setting aside $16.7 billion for employee compensation. That's around $700,000 per employee. Really.

At a time when the economy is contracting and job losses expanding, such numbers have observers miffed. At least one pension fund, The Security Police and Fire Professionals of American Retirement Fund, which had invested in Goldman, has hired a lawyer and filed suit to try to put a stop the payout.

Fortunately, such suits raise the issues and send a message to leaders of public companies. But, unfortunately, there's little these shareholders or anyone can actually do to stop the Goldman-like bonanzas.

As it turns out, pay for performance at many U.S. firms is frequently anything but. Often executives at companies receive lavish incomes for average production. Worse, some get fortunes, even though their performance has been subpar. And, worse still, sometimes executives receive sheer windfalls, even while their performance has been awful.

In fact, the Goldman payout isn't the first time high executive compensation has raised shareholder ire.

One of the most egregious examples of this occurred thirteen years ago, when Disney agreed to pay Michael Ovitz, their poor performing company president $140 million dollars in severance package. And, the Disney board and CEO agreed to the payout, after Ovitz had performed just over a year's worth of work!

One of the well known reasons large payouts occur is because of the rampant conflicts of interests that are inherent in many executive compensation decisions. For instance, the CEO plays an important role in selecting the members of the board of directors, which, upon selection, entitles the appointees to very lucrative director fees, stock, and stock options. The CEO's salary, in turn, is determined, by whom-of course, those very directors who owe their appointment in part to the CEO.

Compensation consultants are brought in to figure whether compensation packages are at market rates. For instance, Disney had a compensation consultant to advise them on how to structure Ovitz's pay at the company.

But, the compensation consultants are appointed by whom-the very executives and directors for whom they will offer an opinion. If the compensation consultants want future work or, for that matter, board members want to stay in the CEO's good graces, then there are fairly predictable incentives to come back with a very high executive pay numbers.

Sometimes, as mentioned, stakeholders in US firms-shareholders and the public-fight back. Congress amended the tax code to take away the deductibility that companies who make large salaries receive. And shareholders, incensed by outsized pay arrangements, brought suit against Disney. The Disney shareholders argued to courts in Delaware, where Disney was incorporated, that the directors were uninformed-which they were-the severance was unconscionably large-which it was-and that Mr. Ovtiz was unqualified-which arguably he might have been.

However, it still remains very much a tough path, fraught with difficulties to try to beat back decisions to take on companies, like Disney, Goldman, or others. Firms can game and restructure compensation arrangements to avoid new changes to the tax code, as they have done with respect to the deductibility provisions.

And, with respect to a courtroom challenge, judges have been loath to hear shareholders out. There are well-known legal tropes that stop courts from intervening in such decision-making. The importance of "centralized management", the need to avoid "courtroom second-guessing" and so forth mean that courts are inclined to leave levels of compensation up to the directors of firms. It means plaintiffs in cases like Disney's have little legal standing to launch a suit and it means that, even if they take such suits to verdict, they too often lose.

As a consequence, plaintiffs, like the latest group that has decided to take on Goldman, are swimming upstream and fighting the good fight. Hopefully, this time the plaintiffs will fare better.

[Image via say.fromage.]

Congress is moving to protect whistleblowers from employer retaliation. Buried in the Investor Protection Act is an amendment that would close a loophole that currently exposes some employees to the will of their employer for reporting corporate wrongdoing.

The Wall Street Journal reports:

[T]he Labor Department has dismissed many whistleblower complaints on a technicality, saying the law, as written, doesn't apply to corporate subsidiaries.

Since the law was passed in 2002, the government has ruled in favor of corporate whistleblowers in 21 out of 1,455 complaints. Another 996 cases have been dismissed. The rest of the cases were withdrawn, settled or are pending.

The amendment just passed out of the House Financial Services Committee by a party-line vote and should come before the full House in a matter of weeks.

Professor Orin Kerr, 2007 recipient of the conservative Federalist Society's Paul M. Bator Award, identifies a recent piece by Andrew Napolitano as a prime example of when an op-ed is "filled with so many errors, misstatements, and plainly weak claims that the mere number of those becomes far more interesting than the argument of the op-ed itself."

Here's FOX News's Napolitano in his own words:

[I]t's clear that his plan is unconstitutional at its core. The practice of medicine consists of the delivery of intimate services to the human body. In almost all instances, the delivery of medical services occurs in one place and does not move across interstate lines. One goes to a physician not to engage in commercial activity, as the Framers of the Constitution understood, but to improve one's health. And the practice of medicine, much like public school safety, has been regulated by states for the past century. 

From the other side of the political spectrum, Anonymous Liberal digs deeper into Napolitano's claims:

Napolitano writes that "the delivery of medical services occurs in one place and does not move across state lines." I suppose that's true in some sense (at least most of the time). But the same is true of buying groceries or guns or just about anything else. And all of these things are clearly within the reach of the Commerce Clause.

It's one thing to argue for a crackpot interpretation of the Constitution. Everyone is free to do that. But you can't just blatantly misrepresent what the current state of the law is. You can't just assert that Roe v. Wade means the opposite of what it actually means. The reality is that if Napolitano's interpretation of [Commerce Clause jurisprudence] was correct, virtually the entire post World War II regulatory state would be unconstitutional. If he was correct, Medicare and Medicaid would be unconstitutional. Needless to say, the Supreme Court never intended to suggest anything of the sort in Lopez.

Federal Communications Commission Chairman Julius Genachowski delivered in a big way this morning on one of the key technology and telecommunications policy promises from the Obama campaign. Genachowski announced, in a speech at the Brookings Institution in Washington, D.C., that his agency would "take steps to preserve Internet openness, helping ensure a future of opportunity, innovation, and a vibrant marketplace of ideas." (President Obama publicized today's move too, taking time during his speech in Troy, NY, on innovation and sustainable growth to promote the FCC announcement.)

Studiously avoiding use of the hot-button term "net neutrality," Genachowski proposed formalizing the FCC's role as "a smart cop on the beat preserving a free and open Internet." He announced that the agency would open a rulemaking process to consider formal adoption of the Commission's existing four Internet principles - guidelines adopted in 2005 on the watch of Republican FCC Chairman Michael Powell - as well as new principles requiring non-discrimination and transparency by wireline and wireless broadband providers.

Genachowski succinctly summarized the FCC's existing four principles, saying that already today, "[n]etwork operators cannot prevent users from accessing the lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network."

Beyond codifying the four principles establishing that framework, the Chairman proposed two new tenets that would join the earlier guidelines in the FCC rules: a non-discrimination principle that would "allow users to decide what content and applications succeed" on the Internet, and a principle requiring transparency from providers of broadband Internet access regarding their network management practices.

Finally, he proposed considering in the rulemaking process whether open Internet rules should apply to mobile networks. Genachowski recognized the qualities of wireless networks, yet stressed the importance of keeping the Internet open no matter how users choose to access it: from a desktop, laptop or smartphone.

The non-discrimination principle would prevent broadband providers from blocking or degrading lawful traffic that runs over their networks, and would stop providers from "favoring some content or applications over others in the connection to subscribers' homes ... just because [a service] competes with a similar service offered by that broadband provider." The FCC proposal would, however, still allow broadband providers to engage in "reasonable" network management - allowing for non-discriminatory traffic management practices during periods of network congestion.

Genachowski also emphasized, repeating an observation from his confirmation hearings this summer, that "open Internet principles apply only to lawful content, services and applications - not to activities like unlawful distribution of copyrighted works, which has serious economic consequences." He also left the door open for broadband providers to offer what are called "managed services" not subject to typical treatment, and promised fact-based, case-by-case determinations for any alleged violations of the non-discrimination mandate.

Despite claims by net neutrality opponents that regulation of the Internet would be unprecedented, the FCC has taken action previously to sanction anticompetitive practices. In 2005, the FCC moved swiftly to prevent telephone company Madison River from blocking a Vonage VoIP service that competed against the telco's own offerings. In 2008, the FCC found unlawful Comcast's practice of "throttling" and blocking certain peer-to-peer file-sharing traffic flowing over the cable giant's broadband network.

Comcast appealed the FCC's decision on the grounds that the agency does not have jurisdiction over the Internet, complaining too that the lack of formal rules provided Comcast with inadequate notice about the agency's policies. The case is currently before the DC Circuit, with the FCC's brief in response to Comcast's challenge due at the court today. Media Access Project and other public interest organizations involved in the case believe that the FCC had ample jurisdiction to act, based on a host of statutes that delegate to the agency the authority to regulate all interstate communications by wire or radio in the United States. MAP and others also believe that the DC Circuit should reject Comcast's notice-based challenge, but would welcome the adoption of formal rules designed to preserve the open Internet.

Comcast's conduct in the run-up to the FCC decision demonstrates the need for the newly proposed sixth principle, which would require transparency in network management. As Chairman Genachowski recounted this morning, Comcast provided no notice to subscribers when it started throttling and blocking this peer-to-peer traffic. Moreover, Comcast originally denied that it was doing any such thing, only admitting its practice after several individuals and organizations definitively proved that blocking had occurred and complained to the FCC about it. The sixth principle would not require broadband providers to disclose personal information about subscribers or sensitive network security details. It would, however, require broadband providers to be open about their traffic management practices.

In closing, Chairman Genachowski argued that his plan "is not about government regulation of the Internet, [but] about fair rules of the road for companies that control access to the Internet." He promised to "do as much as we need to do, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity, and entrepreneurial activity," as the FCC works to protect the Internet when "broadband providers' rational bottom-line interests may diverge from the broad interests of consumers in competition and choice." Anticipating criticisms that have been lobbed at net neutrality proposals in the past, Genachowski suggested that "history's lesson is clear: Ensuring a robust and open Internet is the best thing we can do to promote investment and innovation."

The FCC likely will vote on and release its notice of proposed rulemaking at its October open meeting.