Telecom Preemption ' Ninth Circuit Upholds California Net-Neutrality Law

• Published date: 03 February 2022
• Subject Matter: Media, Telecoms, IT, Entertainment, IT and Internet, Mobile & Cable Communications
• Law Firm: Duane Morris LLP
• Author: J. Tyson Covey and Brian A. McAleenan

The Ninth Circuit Court of Appeals has issued a much-anticipated decision on California's state "net-neutrality" law, which reimposes the net-neutrality requirements the FCC removed back in 2018. ACA Connects v. Bonta, No. 21-15430 (9th Cir., Jan. 28, 20222). The California law is viewed as a template for other states interested in that sort of legislation, and this case served as the lead trial balloon as industry associations challenged the statute on preemption grounds.

As quick background, in 2015 the FCC established net-neutrality rules that prohibited broadband internet service providers from blocking access to websites, slowing certain customers' internet access ("throttling"), or prioritizing access to some websites over others. But in 2018 the FCC reversed itself and removed those rules (relying instead on a "transparency" requirement) 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 of that Act. The purpose in switching to Title I was to subject broadband internet service to only the light-touch regulation that applies to Title I services. The FCC also expressly preempted state laws that were inconsistent with its deregulatory approach, or that would effectively reimpose the net-neutrality rules it repealed. The D.C. Circuit upheld the FCC's reclassification of broadband internet service in 2019, but overturned the express preemption mandate. Mozilla v. FCC, 940 F.3d 1 (D.C. Cir. 2019). It left open the question whether, after the FCC's decision, state net-neutrality requirements could be defeated by other types of preemption.

Several communications industry associations challenged the California law as being barred by both conflict and field preemption. They first contended that reimposing, under state law, the very requirements the FCC deliberately removed in order to promote broadband service directly conflicted with and undermined the FCC's goals and policy choice, and therefore could not stand. The Ninth Circuit disagreed, writing that "an absence of federal regulation may preempt state law only if the federal agency has the statutory authority to regulate in the first place." Slip op. at 18. Here, the court said, the FCC had not been exercising federal statutory authority because, once the FCC reclassified broadband internet service as falling under Title I it lost the power to dictate how that Title I service...