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Why feds can’t block California’s net neutrality bill

Why feds can’t block California’s net neutrality bill


Experts say the new lawsuit rests on shaky legal ground

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Illustration by Alex Castro / The Verge

California just passed the toughest state-level net neutrality law in the nation, and within hours, the Department of Justice sued the state to block the law from going into effect. It’s the start of a new chapter in the fight for net neutrality, as the federal government works hand in hand with the telecom industry to stop a wave of state-level net neutrality protections.

But legal experts told The Verge that the effort to remove states from the consumer protection equation rests on shaky legal ground and may only buy the telecom sector time rather than rolling back the law completely.

California’s SB822 was signed into law on Sunday by California Gov. Jerry Brown. SB822 largely mirrors the FCC’s discarded 2015 net neutrality rules by preventing ISPs from blocking or throttling users’ access to websites and services that compete with an ISP’s own offerings.

“An agency that has no power to regulate has no power to preempt the states.”

But the new bill goes even further by policing things like anti-competitive abuse of usage caps (aka “zero-rating”) and the kind of interconnection interference that resulted in Netflix users seeing streaming slowdowns back in 2014. California is also exploring its own state-level privacy laws in the wake of the parallel industry attack on the FCC’s privacy rules last year.

FCC boss Ajit Pai quickly issued a statement calling the California bill “illegal” and “anti-consumer,” despite the bill having the support of consumer groups. Pai has defended “state rights” when states pass protectionist laws hamstringing broadband competition, but those concerns evaporated when some states attempted to actually protect consumers.

The Department of Justice filed suit against California just hours after Brown signed the bill, claiming it was “an extreme and illegal state law attempting to frustrate federal policy” that could cause “irreparable harm” to the United States. The DOJ is demanding a preliminary injunction to stop California’s law from taking effect on January 1st.

“We are confident that we will prevail in this case—because the facts are on our side,” said Attorney General Jeff Sessions.

But critics of the administration’s frontal assault on consumer protections say that’s wishful thinking, and the entire industry effort hinges on a shaky FCC legal gambit that isn’t likely to succeed.

“The states are responding to their constituents’ demands.”

Foreseeing state challenges to their attack on federal oversight, lobbyists for both Comcast and Verizon last year successfully urged the FCC to include language in its net neutrality repeal “pre-empting” (read: banning) states from protecting consumers moving forward.

But telecom industry legal experts say that when the FCC dismantled its own authority over broadband ISPs (by rolling back their classification of ISPs as Title II common carriers under the Telecom Act), it ironically killed any authority it might have had to tell states what to do.

“An agency that has no power to regulate has no power to preempt the states, according to case law,” Stanford Law professor Barbara van Schewick said in a statement to The Verge.

“When the FCC repealed the 2015 Open Internet Order, it said it had no power to regulate broadband internet access providers,” van Schewick said. “That means the FCC cannot prevent the states from adopting net neutrality protections because the FCC’s repeal order removed its authority to adopt such protections.”

The courts have so far agreed. Charter Spectrum recently tried to use this FCC preemption language to dodge a New York state lawsuit over substandard service and speeds. But a court ruled that the FCC’s preemption language doesn’t nullify a state’s rights to protect consumers from ISP “fraud, deception and false advertising.”

“The California net neutrality law just fills a gap in consumer protection that the FCC has created.”

While the DOJ lawsuit attempts to claim that the 1996 Telecom Act declares that internet services must be “unfettered by Federal or State regulation,” consumer advocates say they’re misrepresenting what the law actually says and conflating regulation of “the internet” with regulation of “internet access providers” specifically.

“Congress created the Telecom Act created to be a joint federal-state jurisdiction law, which is why every state has its own public utilities commission, power over franchises, state pole attachment regulations, consumer protection power, and state-based ISP privacy rules,” Ernesto Falcon, legislative counsel at the Electronic Frontier Foundation, told The Verge.

While the foundation of the industry effort to hamstring states is arguably rotten, the fight will only heat up as more states explore their own state-level rules.

“We’ve been waiting for the FCC and DOJ to act to crush the rebellion on behalf of AT&T, Verizon, and Comcast,” Falcon said. “This lawsuit comes as no surprise. The reality is a vast majority of Americans want legally enforceable net neutrality, and Republicans and Democrats in the states are responding to their constituents’ demands.”

Falcon argues that the DOJ lawsuit is specifically designed to stall state protections as telecom giants fix their gaze on a looming lawsuit by 23 state attorneys general. The states sued the FCC last year, claiming it ignored the public interest and violated agency norms in its rush to please the broadband industry at all costs.

Given the numerous procedural gaffes by the FCC during the net neutrality repeal (from making up a DDoS attack to ignoring identity theft and fraud during the public comment period), an industry victory is far from a sure thing.

Even if the industry succeeds in winning that case and the FCC’s 2015 rules are thrown out, it’s still unlikely that the courts will look kindly on the FCC’s shaky attempt to preempt states from passing their own rules, former FCC lawyer Gigi Sohn, who helped craft the FCC’s 2015 net neutrality rules, told The Verge.

“At best, (the) DOJ may be looking at a short term victory until the DC Circuit decides the merits of its lawsuit,” Sohn said. Meanwhile, “the California net neutrality law simply fills a gap in consumer protection that the FCC has willingly and happily created,” she added.

Still, reestablishing net neutrality in California is just a small step toward protecting the nation at large. More than half the states in the nation are considering new state net neutrality laws, privacy laws, and executive orders to fill the void and protect consumers from the numerous side effects of the glaringly obvious lack of competition in American broadband.

That said, consumers still face an ocean of discordant state-level protections instead of comprehensive federal guidelines. As a result, some states might craft terrible laws or no laws at all, leaving consumers with not only no meaningful broadband competition, but little recourse when those regional monopolies and duopolies misbehave (which they do, often). Meanwhile, consumers in other states will enjoy comprehensive protections that go further than the original FCC rules they are intended to replace.

It’s a problem of the industry’s own making — a direct result of the multiyear, unrelenting assault on federal consumer protections — and the fight is only getting started.