In a highly publicized and politicized decision, the Federal Communications Commission (FCC) voted to repeal net neutrality at the end of last year. Net neutrality, a phrase coined by Columbia Law Professor Tim Wu, is a set of rules to ensure that the internet is kept neutral. To achieve this end, the FCC adopted three bright-line mandates: (1) no blocking legitimate traffic on their networks, (2) no deliberate slowing down of websites, and (3) no selective speed enhancements for certain content in exchange for money from site operators.1 In an effort to block any possible loopholes left open by the three bright-line rules, the FCC also included a “general conduct” standard in its rules which essentially mandated that internet service providers (ISP) be on their best behavior. This umbrella provision gave the FCC enormous latitude in policing the industry.2
Legislators in six states, including New York, California, and Washington, have proposed bills to enforce principles of net neutrality.3 Montana’s Governor issued an executive order, requiring any ISP that accepts contracts with any Montana state agency to agree to net neutrality principles.4
Many of the same states who have proposed new laws have also announced their intention to sue the FCC over the repeal. Thus far, twenty-one state attorneys general have filed suit, calling the repeal “arbitrary, capricious and an abuse of discretion.”5 As Wu explained, the law disfavors complete and abrupt reversal of rules by federal agencies. The issue is one of reliance, and Supreme Court precedent requires that an agency “examine the relevant data and articulate a satisfactory explanation for its action.”6 Wu believes that “since net neutrality rules have been a success by most measures, the justification for killing them would have to be very strong.”7 The FCC, however, contends that federal preemption will prevent the states’ attempts to circumvent the repeal. In the final order, they assert legal authority to preempt inconsistent state regulations on two primary grounds: (1) the Supreme Court’s “impossibility exception,” and (2) the Telecommunications Act of 1996 (“1996 Act”).8
The impossibility exception, recognized by the Supreme Court in 1986, gives the FCC the ability to preempt state regulation where it is impossible to regulate the intrastate components “of a service without affecting interstate communications and the [FCC] determines that such regulation would interfere with federal regulatory objectives.”9 The order relies on the FCC’s well-settled principle that broadband internet access service is considered jurisdictionally interstate for regulatory purposes, despite its intrastate component. This is primarily because most “internet traffic begins and ends across state lines.”10 Accordingly, the order asserts, it would be infeasible for ISPs to comply with state laws without also applying them to interstate communications, thus undermining the FCC’s treatment of interstate traffic.11
The other basis for preemptive authority asserted by the order is a longstanding federal policy of nonregulation of information services. The FCC claims that by adopting its “deregulatory approach to information services in the 1996 Act,” Congress was expressing approval of its decade-old policy of preempting state laws inconsistent with nonregulation.12 It also points to more specific evidence within the 1996 Act. In § 10(e), the Act explicitly permits the FCC’s forbearance determinations to preempt any contrary state regulatory efforts.13 The FCC asserts that it would be incongruous for such forbearance determinations to preempt, while not affording the same preemptive power to a decision not to have a regulation in the first place.
In response, Montana’s Governor argues that his executive order acts as a contract term rather than a mandate or new regulation. Since there are no new regulations, he asserts that there can be no federal preemption. Rather, the state of Montana acts as a consumer, and any company that disagrees with the contract terms Montana has proposed is welcome to not do business with the state.14 Another approach is dismantling the impossibility argument set forth by the FCC by pointing to the different tort laws, consumer protection laws, and tax laws in each state that ISPs are forced to comply with in a patchwork fashion.15
Although states fighting the net neutrality order are preparing their legal arguments, the FCC’s final order contains a provision requiring that lawsuits wait to be filed until after the effective date of the repeal.16 With the date of publication in the federal registry quickly approaching, it is likely that this state- versus federal government battle over net neutrality will remain in the headlines.