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Like many who have been following the net neutrality debate for the past decade plus, I found the lengthy oral argument earlier this month somewhat repetitive. Although there are some nuances this time around (in particular, the question of whether Congress’ repeal of the statute the Federal Communications Commission (FCC) cited to support its transparency rules could be a sleeper issue), most of the key issues had been well rehearsed by this fourth trip through the DC Circuit. Whether transportation of data happens on a stand-alone basis, policy arguments are dressed up as arbitrary and capricious challenges, or bad analogies are used to explain the internet to judges — we’ve been there before, and it’s still hard to escape the wide berth that Brand X gives the Commission on these matters.
But there is one wrinkle that I continue to find fascinating, and that consumed a surprising amount of argument time: the federalism question. Although the case is captioned Mozilla v. FCC, 22 states and the District of Columbia have intervened, in part to challenge the commission’s decision to preempt state broadband regulations. The issue is not academic: Several states have taken steps to reimpose at the state level duties repealed by the commission.
In my latest article for the Free State Foundation, I examine this challenge and its likelihood of success.
The RIF Order‘s preemption provision reflects the Commission’s long-standing “policy of nonregulation to ensure that Internet applications remain insulated from unnecessary and harmful economic regulation at both the federal and state levels.” In 2004, at the dawn of the Internet age, the agency formally preempted any state regulation of information services that would “conflict with our policy of nonregulation.” It grounded this approach in its Bell-era policy that “enhanced services would continue to develop best in an unregulated environment” and explained that the 1996 Telecommunications Act “increases substantially the likelihood that any state attempt to impose economic regulation” would conflict with this policy…[T]he Eighth Circuit upheld this policy in 2007, explaining that “deregulation” is a “valid interest the FCC may protect through preemption of state regulation.” The same court reiterated this conclusion last year, holding that “any state regulation of an information service conflicts with the federal policy of nonregulation, so that such regulation is preempted by federal law.”
The state petitioners have a clever challenge to the preemption provision: Because the agency found that it lacked authority to regulate broadband access, it similarly lacks authority to preempt state broadband regulation. But even if the state petitioners successfully knock out the express preemption provision, any state effort to reimpose net neutrality would likely be struck down because it conflicts with the federal policy.
Legally, [Brand X offers the FCC] a wide range of potential broadband regulatory schemes, all of which are permissible under the Communications Act. On one end of the spectrum, it could opt for a policy of complete nonregulation. On the other end, it could apply the full panoply of common carriage obligations under Title II. In between are a variety of potential bundles of either Title I or Title II-lite regulatory regimes.
The RIF Order represents the agency’s policy judgment regarding the optimal regulatory bundle from among these options. Contrary to petitioners’ claim, the Commission did not completely foreswear any jurisdiction over broadband access. Rather, the agency opted to classify broadband as an information service and subject it to extensive transparency and disclosure obligations. But it decided against more intensive common carrier-like economic restrictions, because in its judgment, general consumer protection and antitrust remedies provide adequate protection for consumers and more intrusive regulations could have adverse effects on consumers and innovation.
[T]he Supreme Court has stated clearly and repeatedly that the Supremacy Clause preempts state laws that “frustrate the accomplishment of a federal objective.” Where, as here, an agency has adopted a “careful regulatory scheme” that balances trade-offs between more and less onerous requirements, states may not upset that balance.
You can read the full article with supporting citations here.
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