WASHINGTON D.C. — Today, TechFreedom published a comprehensive analysis of why state laws and executive orders attempting to replicate, or expand upon, the FCC’s 2015 net neutrality rules will likely fail in court. Earlier this year, the FCC’s Restoring Internet Freedom Order (RIFO) repealed those rules after concluding that broadband is a Title I information service requiring a regulatory light touch, rather than a Title II telecommunication service subject to common carrier regulation. The RIFO reiterated the 2015 Order’s finding that broadband is “jurisdictionally interstate for regulatory purposes,” thereby requiring the FCC to preempt states from imposing the same, or “effectively” the same, net neutrality restrictions. Yet half the states have considered such laws, four have passed state legislatures, and six have been signed as executive orders by governors.

In July, TechFreedom published a working draft of Federal Preemption, the Dormant Commerce Clause & State Regulation of Broadband: Why State Attempts to Impose Net Neutrality Obligations on Internet Service Providers Will Likely Fail. The paper, written by TechFreedom Legal Fellow Graham Owens, published as a working draft on July 19, 2018, and released today in its final form, makes five key findings:

1. Restoring broadband to a Title I classification is a valid exercise of the Commission’s authority, not a surrender of that authority. The RIFO’s adoption of a uniform national policy of deregulation and pro-competition is a valid federal interest that the FCC may achieve through preemption of state regulations.

2. Because the RIFO will succeed in court, the FCC has expressly preempted state regulation. State efforts to impose net neutrality obligations on ISPs are preempted under the Constitution’s Supremacy Clause as any such state regulation will conflict with the federal pro-competition, deregulatory framework established by the RIFO. In 1999, the Supreme Court held that the Telecommunications Act ‘unquestionably’ took ‘the regulation of local telecommunications away from the states,’ while multiple lower courts have held that the Act wholly preempted state regulation of information services because  ‘any regulation of an information service conflicts with the federal policy of nonregulation.’

3. None of the exceptions to federal preemption apply to the state actions. Courts have to made clear that states may not use their spending power to regulate indirectly that which they cannot permissibly regulate directly. To this end, states cannot avoid preemption by claiming they are acting in a proprietary manner in conditioning their broadband procurement contracts on adherence to net neutrality principles.

4. State regulation would violate the Dormant Commerce Clause. Given the inherently interstate nature of Internet communications, any state Internet regulation must extend beyond state borders, requiring ISPs to comply with separate and conflicting legal frameworks, thereby implicating the ‘Dormant Commerce Clause.’ The Supreme Court has found that this doctrine bars states from regulating aspects of commerce that inherently require uniform national regulation, such the Internet.

5. States can protect Internet users by enforcing laws of general applicability. The RIFO expressly recognized the states’ traditional role in policing intrastate conduct and the value inherent in the ‘continued applicability of … general state laws,’ such as those banning practices that harm competition as well as unfair and deceptive acts and practices. These laws would allow states to enforce promises to respect net neutrality principles, as well promises implied by marketing claims about the quality of Internet service they will deliver.

Notwithstanding California’s agreement not to enforce its state net neutrality law pending the appeal of RIFO, other states are moving forward to implement and enforce their own similar laws and executive orders. There no doubt will be litigation between states and the federal government over authority to regulate technology and innovation. This analysis is one of the stepping stones on the path to resolve it.

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Owens is available for comment at media@techfreedom.org and via Twitter @I_Graham_Owens. For more information on the issue, take a look at some of our recent work:

  • Our statement after TechFreedom’s amicus brief filing in the latest Net Neutrality litigation

  • Our statement explaining why Rep. Mike Coffman’s net neutrality legislation won’t resolve the debate

  • Our statement on our letter about why CRA won’t restore Title II

  • Our statement on the 2017 Blackburn bill: “Republicans Propose Net Neutrality Again. Will Democrats Engage?”

  • Only Congress, not the FCC can fix net neutrality, Szóka’s op-ed in WIRED

  • FCC Commissioner Brendan Carr interview on Tech Policy Podcast

  • FCC Chairman Ajit Pai interview on the Tech Policy Podcast

  • Pai Brings Unprecedented Transparency to Open Internet Proceeding, Graham Owens’ blog post

  • How net-neutrality advocates would let Trump control the Internet, Szóka’s op-ed in the Washington Post

  • The Feds lost on net neutrality, but won control of the Internet, Szóka’s op-ed in WIRED