When a district judge decided to let the California Net Neutrality Law become effective earlier this year, it put ISPs in a bind.  They could hold off on immediately appealing and attempt to operate under the California Law and the many other state laws to come, and appeal only when the FCC issues a restrictive net neutrality order later this year or next.   Or they could immediately appeal the California Law to the Ninth Circuit Court of Appeals.  

We speculated that ISPs would appeal now because the longer they wait the more difficult their case would become.  Instead of fighting in one court, they could find themselves appealing multiple state laws in state courts as well as battling the FCC in the federal courts.  The ISPs apparently made the same calculation and on April 6, 2021 appealed the California Law to the Ninth Circuit.

The ISPs, which include, America’s Communication Association (ACA), the Internet and Television Association (NCTA), the Wireless Association (CTIA, and the Broadband Association (USTelecom) make the following arguments in their Opening Brief to support their position that the California district judge’s decision should be reversed and their injunction against the California Law reinstated:

The California Law (SB-822) deliberately conflicts with the 2018 Restoring Internet Freedom Order the D.C. Circuit upheld. Previously, the DC Circuit of Appeals found that the FCC acted within its statutory authority when it classified broadband as an information service and mobile broadband as a private mobile service. That decision was expressly based on the FCC’s conclusion that broadband providers should not be subject to ex ante rules governing their conduct, but instead to a refined transparency approach that, together with competition and existing laws, would preserve the open Internet.

 

SB-822 also conflicts with the Communications Act. It imposes restrictions that the D.C. Circuit and the FCC have held are common-carrier regulations on services that Congress decided “shall” be exempt from such regulations. The district court concluded that, because Congress expressly prohibited only the FCC from imposing those regulations, states remain free to regulate broadband as a common-carrier service. That conclusion ignores the lengthy history of exclusively non-common-carrier regulation of broadband (and its predecessor services) and reads a savings clause in conflict with decisions of other courts of appeals.

More broadly, SB-822 is preempted because it expressly dictates the types of interstate communications services providers may offer and, thereby, regulates in a field Congress occupied with exclusive federal jurisdiction and oversight. The district court’s contrary finding ignores not only a century of settled Communications Act precedent, but also Supreme Court and Ninth Circuit precedent finding field preemption in similar provisions of contemporaneous statutes, as well as the Supreme Court’s admonition against disturbing longstanding interpretations of complex regulatory statutes. (ISPs Opening Brief, Case No. 2:18-cv-02684, filed April 6, 2021, at pp. 24-26, with some slight modifications added).

While the ISPs have the facts on their side that broadband Internet access service has historically been found to be an interstate service under the sole authority of the FCC as granted by Congress in the Communications Act of 1934 and affirmed in 1996, they have their work cut out for them. Unfortunately for them, they are awaiting the judgement of the most liberal federal appeals court – the Ninth Circuit.

Since President Obama directly involved himself in the 2015 FCC decision to impose common carrier rules on the Internet and President Trump removed them in 2018, Internet regulation has become increasingly politicized.    Therefore, the Ninth Circuit is likely to agree with California and preserve its New Neutrality Law.  That will undoubtedly lead to a further appeal to the Supreme Court.

With the High Court tilting conservative, it is possible that pressure will be on Democrats in Congress to seek a compromise with Republicans, if only to preempt an anti- net neutrality Supreme Court decision.  

We have said many times that Congress is the proper venue to make high reaching telecommunications decisions such as Internet regulation. We can only hope they can stop their bickering and work together for once to save the industry from many more years of litigation.