Telecom Decision ' Preemption ' Internet Trade Groups Seek Ninth Circuit Rehearing On California's Net-Neutrality Rules

• Published date: 18 February 2022
• Subject Matter: Media, Telecoms, IT, Entertainment, IT and Internet, Mobile & Cable Communications
• Law Firm: Duane Morris LLP
• Author: J. Tyson Covey

In several states there is an ongoing battle over whether or how states can regulate broadband internet access service in the wake of the D.C. Circuit's Mozilla v. FCC decision (940 F.3d 1). The California case is leading the pack, and last Friday the leading internet trade associations asked the Ninth Circuit for rehearing en banc of its decision upholding a California statute, SB-822, that imposes the same "net-neutrality" obligations on broadband providers that the FCC revoked. ACA Connects v. Bonta, No. 21-15430 (9th Cir. Jan. 28, 2022).

Background. In 2018, the FCC decided to remove its net-neutrality requirements in order to better promote broadband investment, deployment, and competition, goals toward which federal and state governments today are devoting billions of dollars. While core policy concerns drove its decision, the FCC removed its net-neutrality rules by reclassifying broadband internet service as an "information service" under Title I of the federal Communications Act rather than a "telecommunications service" under Title II, which freed broadband internet service from common carrier-type regulation (and the prior net-neutrality requirements).

In Mozilla, the D.C. Circuit upheld the FCC's deregulatory choice, finding the FCC had "lawfully construed an ambiguous statutory phrase in a way that tallies with its policy judgment, as is its prerogative." 940 F.3d at 26. On the other hand, the court struck down the FCC's "Preemptive Directive," which expressly "preempt[ed] any state or local measures that would effectively impose rules or requirements" that the FCC had "repealed or ... refrain[ed] from imposing." But, and crucial to the California law, the court also made clear that while the FCC could not expressly preempt the states this way, state regulation of broadband internet service still could be challenged under conflict preemption, and claims of preemptive conflict would have to be addressed case by case. 940 F.3d at 85 ("if "a state practice actually undermines the [FCC's] 2018 Order, then [the FCC] can invoke conflict preemption").

Ninth Circuit Decision. California responded by enacting, under state law SB-822, the very same net-neutrality rules that the FCC, as a matter of nationwide policy, had just revoked. Several leading internet trade associations sought to enjoin SB-822, but the district court and Ninth Circuit disagreed. They found that (i) once the FCC reclassified broadband internet service as an "information service"...