Broadband Industry Sues Vermont Over Net Neutrality Law

The broadband industry is making good on its threat to sue states that pass their own net neutrality laws.

Today, a coalition of five cable and wireless groups took the state of Vermont to court over new open Internet laws. Several weeks ago, four of the same organizations targeted California's new net neutrality regulations.

The suit in Vermont seeks to invalidate a law passed in May, and an executive order signed in February by Governor Phil Scott, a Republican. Scott's executive order prohibits broadband providers that contract with agencies from blocking or throttling content, applications and services, and from charging companies higher fees for prioritized delivery. The order also prohibits those providers from "unreasonably" interfering with the ability of customers and web companies to reach each other online. In May, the legislature enshrined Scott's order in a new law.

The broadband groups make the same basic arguments against the Vermont measures and the California law: The providers contend that the Federal Communications Commission prohibited states from passing or enforcing their own net neutrality rules last December, when the agency voted to repeal the Obama-era rules. The providers also argue that state broadband laws are unconstitutional because Internet access is an interstate service.

“Vermont’s attempts to revive ... a repealed regulatory regime are plainly preempted by federal law,” the American Cable Association, CTIA -- The Wireless Association, NCTA -- The Internet & Television Association, New England Cable & Telecommunications Association and USTelecom -- The Broadband Association, state in their complaint, brought in federal court in Vermont.

The FCC's repeal, called “Restoring Internet Freedom,” contains provisions prohibiting states from creating or enforcing their own state-specific net neutrality regulations. But it's still unclear whether any part of the “Restoring Internet Freedom” order will be upheld in court -- including the attempt to prevent states from passing their own laws.

Some observers have said that even if the FCC can override state laws in some circumstances, the type of law passed in Vermont -- which covers companies that contract with state agencies -- is especially likely to withstand a legal challenge.

"States have enormous discretion with regard to their power of purchasing," says Harold Feld, senior vice president at the advocacy group Public Knowledge, previously told MediaPost. He added that even when a federal agency overrides state laws, states still are often able to follow their own standards when it comes to spending money.

The broadband providers disagree. “States may not escape federal preemption by regulating indirectly through their spending, procurement, or other commercial powers what they are forbidden from regulating directly,” they allege in their new court papers. “Indeed, if states were permitted to circumvent federal preemption in this manner, they would have a free hand to use their spending powers to undermine established federal law on virtually any topic -- including civil rights, religious freedom, and a variety of other issues.”

Vermont and California aren't the only states to try to protect net neutrality after the FCC voted to repeal the prior rules. The governors of Rhode Island, New York, New Jersey, Montana and Hawaii signed orders similar to the one in Vermont, while the state legislature in Oregon passed a bill banning 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.

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