ST. LOUIS (LN) — An Eighth Circuit panel on Wednesday vacated the Federal Communications Commission’s digital discrimination rule, holding that the Infrastructure Investment and Jobs Act does not authorize disparate impact liability. The court also found the agency exceeded its authority by regulating entities outside the broadband industry.
The decision in Minnesota Telecom Alliance v. FCC, decided May 6, 2026, marks a setback for the FCC’s effort to bridge the digital divide through civil rights-style enforcement. The panel, consisting of Circuit Judges Loken, Benton, and Grasz, sided with industry petitioners who argued the rule lacked statutory footing.
The FCC’s final rule, adopted November 20, 2023, prohibited policies that differentially impact consumers’ access to broadband based on income, race, ethnicity, color, religion, or national origin. The agency interpreted the IIJA’s directive to prevent “digital discrimination of access” as encompassing both disparate treatment and disparate impact liability.
The Eighth Circuit rejected that interpretation, finding the statute’s plain text focused on intent rather than consequences. The court noted the IIJA lacks the “results-oriented language” found in Title VII of the Civil Rights Act and the Fair Housing Act, which the Supreme Court has previously interpreted to allow disparate impact claims.
The court concluded that Congress did not authorize disparate impact liability, stating that the phrase “discrimination of access based on” protected characteristics signals a requirement for discriminatory intent.
The panel also struck down the rule’s expansion of covered entities beyond broadband providers. The FCC had defined covered entities to include contractors, landlords, and other parties that “affect consumer access to broadband.” The court found no textual basis for regulating entities outside the subscriber-provider relationship.
Dissenting Commissioner Brendan Carr had warned during the rulemaking that the disparate impact standard would impose “potentially unbounded liability” on entities for acts or omissions that happened to result in disparate outcomes.
The consolidated cases involved petitions from industry groups including the Texas Cable Association, USTelecom, and the National Multifamily Housing Council, as well as public interest groups who argued the rule did not go far enough.
The FCC adopted the final rule in a 3-2 vote, with Commissioners Carr and Nathan Simington dissenting. Simington criticized the rule’s technical or economic feasibility defense, arguing it required providers to sacrifice profitability to advance digital equity goals.
The Eighth Circuit’s ruling leaves the FCC without a federal framework for enforcing digital discrimination claims under the IIJA. The agency may seek legislative clarification or pursue alternative regulatory strategies within its existing statutory authority.