California Enacts Net Neutrality Law, Faces Suit By DOJ

A new net neutrality law in California, signed Sunday night by Governor Jerry Brown, has set the stage for a showdown between states and the federal government over broadband policy.

California's SB 822, which largely restores the Obama-era net neutrality regulations, prohibits broadband providers from blocking or throttling traffic, charging higher fees for fast-lane service, and from exempting their own video streams from consumers' data caps. Within an hour of its enactment, the Department of Justice sued to block the measure.

California ... seeks to second-guess the Federal Government’s regulatory approach by enacting SB-822,” the Justice Department writes in a complaint brought Sunday in U.S. District Court for the Eastern District of California. The Justice Department is seeking a court order declaring California's law invalid and blocking the state from enforcing it.



Last December, the Republican-led FCC voted 3-2 to repeal regulations that prohibited broadband providers from blocking or throttling traffic, and from charging higher fees for prioritized delivery. The agency said at the time it was also preempting states from passing or enforcing their own broadband laws.

California isn't the only state to attempt to reinstate net neutrality rules. Earlier this year, the governors of Rhode Island, New York, New Jersey, Montana, Hawaii and Vermont signed orders requiring state agencies to contract only with providers that follow net neutrality principles. In Oregon, lawmakers passed a bill that prohibits state agencies from contracting with broadband providers that violate net neutrality principles. Washington state passed a more comprehensive law that prohibits broadband providers operating in the state from blocking or throttling traffic and from charging companies higher fees for prioritized delivery

It's not clear whether the agency's attempt to preempt state laws will hold up in court. Telecom expert Catherine Sandoval, a law professor at Santa Clara University and recent member of the California Public Utilities Commission, previously told MediaPost that the argument for preemption is “very problematic.”

She said the government will have to argue that the FCC has "occupied the field" of broadband by passing the regulations that make it impossible for carriers to comply with state and federal rules at the same time. Here, by withdrawing regulations, the FCC has done the opposite of occupying the field, she said.

FCC Chairman Ajit Pai, who shepherded the repeal, says the prior rules were too "heavy handed,” and depressed investment.

But net neutrality proponents say net neutrality rules are necessary to prevent Comcast, AT&T and other broadband providers from censoring sites or discriminating against competitors like Netflix. Advocates who examined the carriers' stock reports dispute that the rules depressed investment; Free Press said last year that investment by 13 major broadband providers increased in the two years after the FCC passed the net neutrality regulations.

The Justice Department says in its lawsuit that the Obama-era rules were a departure from the FCC's prior decisions. When the FCC passed net neutrality rules in 2015, the agency, for the first time, declared broadband a utility service.

But even though the FCC hadn't previously characterized broadband as a utility, the agency had attempted to impose some common carrier rules in the past -- including regulations against blocking and throttling traffic. An appellate court struck down those prior regulations in 2014, ruling that the FCC could only impose common carrier rules on providers of utility services.

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