TR Daily Industry Groups Challenge Vermont Net Neutrality Law in Court
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Thursday, October 18, 2018

Industry Groups Challenge Vermont Net Neutrality Law in Court

Five industry associations representing cable and Internet service providers today filed a lawsuit challenging Vermont’s state mandate prohibiting firms that don’t comply with net neutrality standards from receiving state contracts.

The lawsuit, filed by the American Cable Association (ACA), CTIA, NCTA, New England Cable & Telecommunications Association (NECTA), and the U.S. Telecom Association, in the U.S. District Court in Vermont, also challenges an executive order regarding net neutrality signed by Gov. Phil Scott (R.) earlier this year.

“Broadband providers are united in support of an open Internet and committed to delivering the content and services consumers demand. We oppose the actions in Vermont because states cannot use their spending and procurement authority to bypass federal laws they do not like. A 50-state patchwork approach threatens service for customers, hampers innovation and dampens investment in local communities, which is why Congress should adopt a permanent, enforceable, national framework to safeguard an open Internet for all Americans,” the groups said in a statement.

The governor issued a statement today promising to defend the state’s net neutrality law.

“Our net neutrality legislation and my executive order demonstrate a clear commitment from Vermont’s elected officials, across branches and party lines, to preserving and promoting a free and open Internet in Vermont,” Gov. Scott said.

He added, “While I understand consistent regulation is important to ensuring a vibrant and thriving telecom and cable sector, our obligation as a state government is to our citizens, who I strongly believe have a right to free and open access to information on the Internet. In the absence of a national standard to protect that right, states must act.”

Earlier this year, Gov. Scott signed an executive order to mandate that all state contracts with ISPs include net neutrality protections. He also signed into law a bill (SB 289) which similarly requires ISPs operating in the state to comply with certain consumer protection and net neutrality standards if they want to do business with state agencies.

The associations allege in the lawsuit (“American Cable Association, et al. v. Philip B. Scott, in his official capacity as Governor of Vermont, et al.,” case 2:18-cv-167)that the executive order and SB 289 “impose broad obligations that the Federal Communications Commission’s (FCC) 2018 Restoring Internet Freedom Order and the federal Communications Act of 1934, as amended (the Communications Act), prohibit states from imposing,” and are “therefore preempted under the Supremacy Clause of the United States Constitution.”

“The executive order and S 289 are unconstitutional for the additional reason that they regulate outside the borders of the State of Vermont and burden interstate commerce in violation of the dormant Commerce Clause of the United States Constitution. As the FCC has repeatedly recognized, Internet traffic flows freely between states, making it difficult or impossible for a provider to distinguish traffic moving within Vermont from traffic that crosses state borders. Both the Supremacy Clause and the dormant Commerce Clause protect broadband Internet service providers (ISPs) from a patchwork of inconsistent regulations that are impossible for them to comply with as a practical matter. The court should declare that the executive order and S 289 are preempted and unconstitutional, and should permanently enjoin the defendants from enforcing or giving effect to them,” the lawsuit states.

The groups made the same argument in a lawsuit they filed earlier this month challenging the law recently signed by California Gov. Jerry Brown (D.) imposing even stricter net neutrality standards on California ISPs (TR Daily, Oct. 3). The California law (SB 822) 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."

Both lawsuits argue that the state laws seek to regulate “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.”

In today’s complaint, the groups allege that the Vermont executive order and law “are deliberately intended to replicate the rules the FCC repealed in the 2018 order and thereby effectively nullify federal law.”

“The executive order and S 289 thus impose pervasive common carrier net neutrality mandates on an ISP at the moment it signs a service contract with the state. These contracts include agreements with a wide array of state entities, and each of the associations have members that currently and routinely enter and maintain such contracts with such entities in Vermont,” they said.

In addition, they argue that the executive order “goes even further than the FCC’s repealed rules. The 2015 order reclassified and regulated only BIAS, that is, only mass-market broadband Internet access sold to residential and small business customers. But the executive order applies not only to ISPs’ provision of BIAS, but also to their provision of enterprise Internet access services sold to government agencies and large businesses. Thus, the executive order not only imposes the net neutrality obligations that the FCC repealed in the 2018 order, but also expands those obligations to reach all broadband Internet services offered by ISPs contracting with the state, including those the FCC chose not to subject to such mandates.” —Carrie DeLeon, [email protected]

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