TR Daily ACA, CTIA, NCTA, USTelecom Challenge Calif. Net Neutrality Law
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Wednesday, October 3, 2018

ACA, CTIA, NCTA, USTelecom Challenge Calif. Net Neutrality Law

The American Cable Association, CTIA, NCTA, and the U.S. Telecom Association have jointly filed a lawsuit challenging the new California net neutrality law as “a classic example of unconstitutional state regulation.”

In their complaint filed today at the U.S. District Court for the Eastern District of California, the four trade groups representing a range of broadband Internet access service (BIAS) providers said that the California law violates the Communications Act by imposing common carrier regulations on information services, violates the “dormant” or “negative” commerce clause of the U.S. Constitution by regulating interstate services, and is preempted by the Constitution’s Supremacy Clause.

In a joint statement, the trade groups said, “The nation’s broadband providers are the innovation engine of America’s digital economy and remain committed to an open Internet for consumers. We oppose California’s action to regulate Internet access because it threatens to affect negatively services for millions of consumers and harm new investment and economic growth. Republican and Democratic administrations, time and again, have embraced the notion that actions like this are preempted by federal law. We believe the courts will continue to uphold that fundamental principle. Meanwhile, we will continue our work to ensure Congress adopts bipartisan legislation to create a permanent framework for protecting the open Internet that consumers expect and deserve.”

In the wake of a December 2017 FCC decision to reclassify BIAS as an information service and to eradicate most of the net neutrality protections adopted by the Democratic-majority FCC in 2015, the California legislature sought to reinstate net neutrality protections at the state level.

The California Internet Consumer Protection and Net Neutrality Act of 2018 (SB 822) signed by Gov. Jerry Brown (D.) on Sunday prohibits broadband Internet access service providers from “blocking lawful content, applications, services, or nonharmful devices, impairing or degrading lawful Internet traffic on the basis of Internet content, application, or service, or use of a nonharmful device, and specified practices relating to zero-rating.”

It also prohibits fixed and mobile Internet service providers from “offering or providing services other than broadband Internet access service that are delivered over the same last-mile connection as the broadband Internet access service, if those services have the purpose or effect of evading the above-described prohibitions or negatively affect the performance of broadband Internet access service.”

On the same day that Gov. Brown signed the measure, the Justice Department filed a lawsuit challenging the law, saying that it is an effort to “subvert the federal government’s deregulatory approach by imposing burdensome state regulations on the free Internet, which is unlawful and anti-consumer” (TR Daily, Oct. 1). Like today’s complaint, the Justice lawsuit was filed with the Eastern District of California.

The four trade groups that filed their challenge today say the California net neutrality law “was purposefully intended to countermand and undermine federal law by imposing on BIAS the very same regulations that the Federal Communications Commission (‘FCC’) expressly repealed in its 2018 Restoring Internet Freedom Order (and by adopting even more restrictive regulations), despite the fact that both the FCC decision and the federal Communications Act of 1934, as amended (‘Communications Act’), prohibit states from taking such action with respect to jurisdictionally interstate services like BIAS.”

The California law “is therefore preempted under the Supremacy Clause of the United States Constitution. It also regulates far outside the borders of the State of California and unduly burdens interstate commerce in violation of the dormant Commerce Clause of the United States Constitution. As the FCC has repeatedly recognized, due to the inherently interstate nature of Internet service, it is impossible or impracticable for an Internet service provider (‘ISP’) offering BIAS to distinguish traffic that moves only within California from traffic that crosses state borders. Both the Supremacy Clause and the dormant Commerce Clause protect ISPs from a patchwork of inconsistent regulations that are unduly burdensome and impossible to comply with as a practical matter. The Court should declare that SB-822 is preempted and unconstitutional, and should permanently enjoin Defendant from enforcing or giving effect to it,” they added.

They noted that the restoring Internet freedom (RIF) order that the FCC adopted in December 2017 and published in the “Federal Register” in 2018 “included a broadly worded express preemption directive, making clear that the 2018 Order ‘preempt[s] any state or local measures that would effectively impose rules or requirements that [the FCC has] repealed or decided to refrain from imposing in order or that would impose more stringent requirements for any aspect of broadband service’ addressed in the 2018 Order. … Notably, the primacy of federal law in this ‘inherently’ ‘jurisdictionally interstate’ context is one of the few points on which the 2018 Order and the 2015 Order agree: both decisions ‘preclude[d] states from imposing obligations on broadband services that are inconsistent with the carefully tailored [federal] regulatory scheme.’”

“SB-822 now purports to re-impose every single one of those restrictions on any ISP providing BIAS in the State of California. Moreover, SB-822 establishes restrictions that go further than those repealed in the 2018 Order, including banning outright the ‘zero-rating’ of traffic delivered to users and imposing ambiguous restrictions on agreements for the exchange of Internet traffic with edge providers and other Internet network operators,” they said.

“In declining to ban zero-rating and paid interconnection in the 2015 Order, the FCC expressly found that both practices can provide significant benefits to consumers and edge providers,” they added.

Regarding the commerce clause, the groups said that the California law “is not limited to ISPs’ dealings with California customers; it also effectively regulates ISPs’ contracts with edge providers in all fifty states, and the exchange of traffic occurring wholly outside of California. SB-822 also violates the ‘dormant’ or ‘negative’ Commerce Clause because it imposes burdens on interstate commerce that far outweigh any purported benefits to California by re-imposing rules that the FCC expressly found to harm interstate commerce and to offer no net benefits.” —Lynn Stanton, [email protected]

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