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Net neutrality advocates have found some new allies in their efforts to combat the Federal Communications Commission’s (FCC) Restoring Internet Freedom Order: state governments. Earlier this month, 21 state attorneys general challenged the commission’s order in court. Other state officials have introduced draft legislation and executive orders designed to reimpose at the state level the obligations that the federal government just lifted.
But ultimately, these initiatives are likely to be more symbolic than substantial. While the Communications Act gives states a significant role in telecommunications regulation, both the statute and broader constitutional doctrines limit the ability of a single state (or even a group of states) to dictate national policy. Moreover, even if states had this power, it’s unclear they would want to do so, as current efforts may interfere with other important state broadband initiatives.
Net neutrality advocates praised the decision by a coalition of states to seek judicial review of the Restoring Internet Freedom Order. Practically, these states bring significant resources and talented lawyers to the fight, which will help assure that the case is well briefed. But legally, their participation is unlikely to shift the odds of success. The states are not differently situated than the private litigants challenging the order and therefore are likely to make the same legal arguments. These arguments are not likely to succeed for reasons that I and Gus Hurwitz have previously discussed.
Direct broadband regulation
Some state lawmakers, such as California’s Senate President pro Tempore Kevin de Leon, have introduced bills that would prohibit blocking, throttling, and paid prioritization under state law. But like the Open Internet Order that it replaced, the Restoring Internet Freedom Order contains explicit language preempting state laws that interfere with the commission’s deregulatory effort. Courts have explained that in this situation, state law must yield.
This conflict is similar to the regulatory battle over Voice over Internet Protocol (VoIP) service. In 2003, Minnesota sought to regulate VoIP providers such as Vonage under state telephone laws. The FCC preempted this decision, explaining (among other arguments) that Minnesota’s efforts could interfere with the agency’s “long-standing national policy of nonregulation of information services.” The Eighth Circuit agreed, invalidating Minnesota’s efforts. A similar result is likely here, especially since the commission’s order explicitly restored broadband’s classification as an “information service” and expressly preempted state law that would treat it otherwise. (It is perhaps for this reason that de Leon has amended his original proposal.)
Indirect broadband regulation through procurement law
More intriguing are the efforts by some states to avoid preemption by exercising the power of the purse rather than the power of law. Last week, Montana’s governor issued an executive order prohibiting the state from contracting for telecommunications service unless the service provider abides by the 2015 Open Internet Order’s provisions regarding the state itself or any Montana consumer. New York’s governor signed a similar executive order a few days later, though unlike Montana, the New York order appears limited to services provided to the state itself and does not attempt to regulate the relationship between broadband providers and private consumers. Neither order mandates net neutrality, instead incentivizing companies to adopt net neutrality voluntarily as a condition of receiving public funds.
It’s unclear whether this nuance is sufficient to avoid preemption, as it conflicts with the FCC’s goal of keeping broadband providers free of such restrictions. In 2000, the Supreme Court struck down a similar effort by Massachusetts to prevent state agencies from purchasing goods from companies doing business with Burma because this power of the purse conflicted with federal policy toward the country.
But even if it survives preemption, this effort is likely prohibited by the Dormant Commerce Clause. This doctrine prohibits states from unduly burdening interstate commerce. In American Library Association v. Pataki, the district court applied this doctrine to strike down a New York statute regulating internet activity. The opinion explained that the statute affected interstate transmission of information online and had the practical effect of exporting the state’s domestic policies beyond its borders. The court also explained that “the courts have long recognized that certain types of commerce demand consistent treatment and are therefore susceptible to regulation only on a national level. The Internet represents one of those areas. . . . Without the limitations imposed by the Commerce Clause, these inconsistent regulatory schemes could paralyze the development of the Internet altogether.” The court cited earlier cases striking down state statutes that regulated the maximum length of trains in a state and mandated the use of particular mudguards on trucks because these state regulations interfered with the need for national uniformity of the railroad and trucking networks, respectively.
The same logic likely applies in this case. On their faces, the Montana and New York orders directly interfere with interstate commerce: They prohibit blocking, throttling, and prioritization of all internet traffic without limiting the prohibition merely to intrastate transmissions (a limitation that would likely be impossible to delineate anyway). The practical effect is to export these states’ domestic policies. At a minimum, requiring certain network management practices within a state threatens the uniform treatment of traffic and raises the specter of balkanizing the network into a series of “splinternets” in violation of explicit national policy. Notably, the market participant doctrine exempts some state action from dormant commerce clause challenge if the state is acting as a business participant rather than as a regulator, which may shield New York from this particular claim. But the Supreme Court has limited the exemption if the state action has a substantial regulatory effect beyond the parties to the transaction, so it is unlikely to protect Montana’s efforts to reach private agreements between ISPs and consumers.
Practical effects of executive orders
It’s also unclear whether Montana and New York understood the practical effects of these orders. On their face, the orders prohibit the state from contracting with broadband providers that prioritize some traffic over others. This seemingly includes FirstNet, the new nationwide public safety broadband network that prioritizes the communications needs of first responders in the event of an emergency.
States play an important role in telecommunications regulation. They preside over issues involving local knowledge (such as tower siting) and make rules on issues unique to the state (such as requiring customer service in all languages spoken by a sizable portion of that state’s residents). But they cannot, and should not, try to dictate the traffic management practices of nationwide broadband networks. That power is best exercised by Congress and its designated entity for national telecommunications policy, the FCC.
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