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HomeSpotlight Story | Bird’s Eye View | Budget & Taxes | Politics & Leadership | Governors | Hot Issues | Once Around the Statehouse Lightly
In the last bill signing session of his long and historic career, California Gov. Jerry Brown (D) endorsed a measure last month that overrides federal rules and gives the Golden State the toughest net neutrality statute in the nation. But with multiple lawsuits now in play, Brown may well be retired to his Colusa ranch property before we know if the law will ever go into effect.
The legislation Brown signed actually takes net neutrality rules even further than those the Federal Communications Commission tossed aside last year. Under SB 822, Internet providers would not only be barred from blocking or slowing down websites and services, they would be prohibited from charging new fees and engaging in “zero rating,” the practice of exempting favored sites and services from customer data caps.
Brown’s signature on the bill was barely dry when the U.S. Department of Justice filed a lawsuit seeking to block it. In a statement, U.S. Attorney General Jeff Sessions accused the state of overstepping its authority and vowing to fight “with vigor” to have the new law tossed aside.
“Under the Constitution, states do not regulate interstate commerce — the federal government does,” he said, adding “We are confident that we will prevail in this case because the facts are on our side.”
The facts, as Sessions sees it, bar California or any state from enacting its own laws regulating the Internet. In the eyes of the Trump administration, that power is reserved only for the federal government. It is an opinion shared by large broadband and wireless companies like AT&T, Verizon and Charter Communications.
On October 3rd, four industry associations - American Cable Association, the Wireless Association, the Internet & Television Association and the Broadband Association - filed their own suit, calling the law a “classic example of unconstitutional state regulation.” In a statement, the group said the law “threatens to negatively affect services for millions of consumers and harm new investment and economic growth.”
But while the feds and big telecoms were unhappy, consumer advocates and small business groups were thrilled. In a statement, Mark Herbert, California Director for Small Business Majority, said that without the return of net neutrality, “California’s small businesses would have been at a disadvantage when trying to compete with large corporations that have the resources to ensure their websites receive special prioritization from internet service providers.”
The debate over net neutrality has been building for years, sparked by complaints that carriers like AT&T and others were blocking cell phone users from making Skype calls or throttling the speed of services like Hulu or Netflix in an effort to coerce customers into paying for their services instead. That led in 2015 to the Federal Communications Commission adopting sweeping new rules that barred providers from blocking, throttling down or otherwise discriminating against lawful Internet content.
Those rules barely lasted two years. In December 2017, the FCC voted to do away with net neutrality guarantees, a move FCC Chairman Ajit Pai hailed as a boon to consumers, saying it would spur innovation, competition and investment from broadband providers.
Consumer advocacy groups disagreed, arguing that allowing telecoms to suppress competitors would actually stifle competition and innovation by preventing smaller startups from gaining headway in the marketplace. Civil rights groups also complained, citing the power of the Internet companies to limit free speech if they so desired.
Those rules officially expired in June of this year. In January, 21 states and the District of Columbia filed a petition for review seeking to block that action. The suit called the FCC decision to end net neutrality “arbitrary” and “capricious” and done without regard to the harm it could do to consumers. It further contends that the FCC was unlawfully pre-empting state authority by barring states from enacting their own net neutrality laws. A hearing on that litigation is scheduled in the Appeals Court for the District of Columbia next February.
At the heart of the battle is whether a government agency – in this case the FCC – has the power to make such rules, or whether that is the domain of Congress.
“The FCC ruling has an explicit provision forbidding states from adopting their own net neutrality laws,” says University of California law professor Ash Bhagwat. “It’s not ambiguous. It’s not unclear. The fight is over whether the FCC has the power to do that.”
There is no easy reading of the tea leaves on which way that battle will go. Bhagwat says there is no federal law that clearly lays out when, where or even if federal agencies have the power to preempt state laws. To make matters worse, there is no clear precedent from previous court rulings, which he says are all “all over the place.”
Some opponents of the California law point to a 1978 law by Congress that deregulated the airline industry while also prohibiting states from enacting their own regulations. But supporters bark back that those rules were enacted by Congress, not issued arbitrarily by a federal agency.
“If Congress had specifically authorized the FCC to preempt state law, I’m pretty confident the FCC would win this case,” Bhagwat says. “But they didn’t do that, so now everything is in question.”
The California law goes into effect on Jan. 1 2019. The federal lawsuit seeks to block that from happening until the D.C. Circuit Court has made its ruling. If the court rules against the FCC action to dispose of its own net neutrality regulations, most of California’s new law could basically become moot because the FCC’s original net neutrality rules would again be in place. Those rules, however, did not include the ban on zero rating contained in California SB 822.
The Golden State may not be the only one with such a provision, either. According to the National Conference of State Legislatures, 32 states introduced over 100 net neutrality measures this year. Measures were enacted in Washington, Oregon and Vermont as well, although all were narrower in scope than California’s pending measure. Governors in Montana, Hawaii, New Jersey, New York, Rhode Island and Vermont also issued executive orders imposing net neutrality requirements on companies doing business with state government.
A federal judge has set a hearing for Monday Nov. 14 in Sacramento on the DOJ lawsuit. That effort as of now is directed only at California, but at least one other governor sounds like he is spoiling for a fight as well.
“Bring it on,” Washington Gov. Jay Inslee (D) told Seattle radio station KEXP last week. “If the president sues us, we’ll be ready.”