Judges Question Preemption in Calif. Net Neutrality Case
Ninth U.S. Circuit Court of Appeals Judges Danielle Forrest and Mary Schroeder asked about FCC preemptive authority after reclassifying broadband as a Communications Act Title I service, at oral argument Tuesday on ISP associations challenging a lower court denying preliminary injunction against California’s 2018 net neutrality law (case 21-15430). Judge Clifford Wallace asked why the 9th Circuit should bother with a preliminary appeal.
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Forrest said the 9th Circuit will take under advisement March's appeal of February’s district court ruling (see 2103100029). U.S. District Judge John Mendez in Sacramento said then he didn’t find ACA Connects, CTIA, NCTA and USTelecom showed a likelihood of success on the merits, or that they would face irreparable harm from the law taking effect (see 2102230073 and 2102230072).
“The argument would be easier” for industry if Title II is “an ‘all hands on’ regulatory approach and Title I is a ‘light touch’ regulatory approach,” said Forrest toward the end of the 30-minute livestreamed hearing. “But Title I is a ‘We don’t have authority to regulate’ approach.” Earlier, Schroeder said she's “struggling with the fact that what [the FCC] did was reclassify these services.” She asked what preemptive authority flows from reclassifying to Title I.
Title I doesn’t mean no authority to regulate, industry attorney Scott Angstreich of Kellogg Hansen said, disagreeing with Forrest. “Brand X makes clear that the FCC has the authority under Title I to continue to regulate.” If the FCC thought the best way to protect the internet was Title II, it had statutory authority to apply it, said Angstreich. “The FCC concluded that that was affirmatively harmful and unnecessary.”
Choosing Title I “may reflect the agency’s policy judgment” but doesn’t mean the decision preempts, argued California Deputy Attorney General Patty Li for AG Rob Bonta (D). “The preemptive effect of the classification decision flows from the statute itself.” If choosing a classification is a policy decision, “how is there not a conflict?” asked Forrest. Classification “is not meant to be a way for the agency to revise the statute,” Li replied. “What they have chosen is Title I regulation” and under that classification, “the agency can’t even impose net neutrality protections, so it is impossible for the agency to then preempt the states.”
Forrest asked if there's a way for the FCC to make a non-regulatory approach be preemptive. Li said the agency could preempt states if it classified as Title II and went through a rulemaking to forbear. Schroeder asked Li to respond to industry’s argument that California is unlawfully regulating an interstate service. Li said there's no “bright line” between intrastate and interstate services: “A better reading ... is that when a service is Title I, it is left open for both the federal agency and the states to regulate.” The Act limits the FCC, not states, she said.
“I’ve got something that bothers me,” said Wallace: Rather than rule on appeals of preliminary injunction decisions, the court usually advises counsel to move forward with cases in lower court “and let us have it on final appeal.” Judges’ time “is limited, too,” he said.
ISPs “are facing ... and will continue to face the very harms we identified” in court filings because the lower court denied preliminary injunction, responded Angstreich. California has served discovery in the district court case, but not much of a factual record needs to be developed, he said: Either the FCC order or the Act has preemptive effects or doesn't.
Judges’ questions suggest the panel leans in California’s favor, said University of California-Berkeley law professor Tejas Narechania. Forrest in particular seemed to believe the FCC deeming broadband an information service “defines the scope of the FCC's power,” including if the agency can preempt states, the academic emailed. “It's also telling that the panel asked about whether the FCC had an alternate path to preemption.”
"Panel might decide that ripeness is easiest way to deal with this," tweeted Public Knowledge Senior Vice President Harold Feld. "But it looked like majority interested in just affirming district court on merits."