9th Circuit: FCC Gave Up Power to Preempt Calif. on Net Neutrality

The “well-reasoned” decision has “implications for state oversight writ large with respect to information services,” said NARUC General Counsel Brad Ramsay. People on both sides of the debate urged national action. See also our news bulletin on the new action.

The 9th Circuit agreed with U.S. District Court in Sacramento, which denied preliminary injunction against California’s 2018 law last February. ACA Connects, CTIA, NCTA and USTelecom appealed the temporary injunction in March in case 21-15430.

The ISP association challengers "will review our options,” they said in a joint statement. “A piecemeal approach to this issue is untenable and Congress should codify national rules for an open Internet once and for all.”

“As the pandemic continues to rage and our lives move more and more online, net neutrality has never been more essential for public health and safety, education, and our economy,” applauded California Attorney General Rob Bonta (D). The 2018 law’s author, Sen. Scott Wiener (D), said it’s “a victory for everyone who uses the internet” and “a landmark day for our state.”

When the last FCC repealed net neutrality, "states stepped into the void and put in place their own policies," tweeted FCC Chairwoman Jessica Rosenworcel. "I support Net Neutrality and we need once again to make it the law of the land."

“Only the invocation of federal regulatory authority can preempt state regulatory authority,” wrote Judge Mary Schroeder. “As the D.C. Circuit held in Mozilla, by classifying broadband internet services as information services, the FCC no longer has the authority to regulate in the same manner that it had when these services were classified as telecommunications services.” Without authority to preempt, said Schroeder, it doesn’t “much matter” if the state law conflicts with the federal policy objectives underlying the reclassification decision.” Judge Danielle Forrest joined the opinion and Judge Clifford Wallace concurred.

California's law doesn’t conflict with the Communications Act, which limits FCC but not states’ regulatory authority, and ISPs’ field preemption argument is foreclosed by case law and the act, said the opinion: “The Communications Act itself reflects a federal scheme that leaves room for state regulation that may touch on interstate services.”

The court "mistook the FCC’s decision to impose a transparency and enforcement-based regime on broadband providers as a decision to abandon the field altogether," emailed Wiley's Tom Johnson, who was FCC general counsel under Chairman Ajit Pai. "The FCC’s decision should receive the same preemptive effect as net neutrality rules under Title II. Ultimately, neither providers nor consumers benefit when states can impose conflicting requirements on national broadband networks.”

9th Circuit judges were guided by the D.C. Circuit in Mozilla, Schroeder wrote. “A fundamental principle of preemption … is that an absence of federal regulation may preempt state law only if the federal agency has the statutory authority to regulate in the first place.” The D.C. Circuit upheld the FCC's determining a disclosure-based regime provided consumer protection, but it didn’t say this “displaced all state regulatory authority that went beyond the federal disclosure requirements,” the judge said.

Appealing from preliminary injunction often leads to unnecessary delay, noted Wallace in the concurrence. “Given the purported urgency of the case’s resolution, the parties might” have been better off pursuing claims in district court rather than awaiting a 9th Circuit decision “for nearly one year.”

State Impact

The decision is good news for New York and Vermont, which face challenges by ISPs that claim the 2018 FCC order preempts state laws, emailed Berkeley Law professor Tejas Narechania. New York’s contested law requiring $15 monthly low-income broadband plans is now before the 2nd Circuit (see 2112080061).

Vermont's case raises “practically identical” issues as the California case, said Narechania: The 9th Circuit decision “points to a range of state regulatory measures beyond net neutrality, suggesting that similar reasoning applies to New York's broadband affordability provisions.” Vermont net neutrality litigation had been on hold at U.S. District Court in Burlington pending the 9th Circuit decision (see 2112170032).

"This is the first appeals court decision on federal preemption of specific state laws regulating broadband,” and it was unanimous, emailed Stanford Law professor Barbara van Schewick, who helped develop California's law. “While it's not a precedent for lawsuits in Vermont and New York State, other courts are likely to give it significant weight.”

The opinion “will likely assist in the defense” of lawsuits against other states following California’s lead, said Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman. He sees broad consensus that Congress should resolve the net neutrality debate: “It may well be that this decision will help stakeholders find common ground to pass such a law. But the American public can’t wait, so state laws like California’s remain necessary for the foreseeable future.”

“This decision clarifies that states have room to enact broadband consumer protection laws that go beyond the federal baseline,” said Public Knowledge Legal Director John Bergmayer. When the FCC gets five commissioners, “it should put into place rules at least as strong as California’s nationwide, making some state measures unnecessary.”

Free State Foundation President Randolph May sees “a good chance that other circuits might reach a different conclusion regarding preemption.” ISPs facing legacy common carrier rules and a state patchwork, he wrote, “should prompt Congress to resolve the decades-old net neutrality controversy by adopting a new law that prevents consumer harm while recognizing the technologically dynamic nature of today’s Internet ecosystem.”

“The job isn’t done,” said Free Press General Counsel Matt Wood in a statement, urging Senate confirmation of Gigi Sohn as the FCC’s fifth commissioner. “This win is significant because it offers protections to people in our most populous state and drives the national conversation forward,” but “we still need the Biden FCC to reclaim its authority not just for nationwide open-internet rules, but for policies promoting affordable, resilient, just and reasonable internet connections for everyone.”