California Net Neutrality Law Upheld By Appeals Court

A federal appeals court on Friday rejected broadband providers' challenge to California's net neutrality law.

That measure, passed in 2018, prohibits broadband providers from blocking or throttling traffic, charging higher fees for fast-lane service, and exempting their own video streams from consumers' data caps.

The Federal Communications Commission passed similar regulations in 2015, but then repealed those rules during the Trump administration.

Four broadband industry groups (American Cable Association, CTIA -- The Wireless Association, NCTA -- The Internet & Television Association and USTelecom -- The Broadband Association) challenged California's law in court and sought an injunction against its enforcement.

The industry groups argued that internet access is “inherently interstate,” and therefore not subject to state laws.

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The organizations also contended that California's law conflicted with the FCC's decision to repeal the 2015 rules.

U.S. District Court Judge John Mendez in Sacramento rejected the broadband industry's arguments and refused to block the law from taking effect.

The providers then appealed to the 9th Circuit. On Friday, a three-judge panel of that court rejected the carriers' arguments.

We conclude the district court correctly denied the preliminary injunction,” Circuit Justice Mary Schroeder wrote

She added that the FCC's decision to revoke the Obama-era rules doesn't prevent states from passing their own laws, noting that the FCC effectively stripped itself of authority over broadband when it revoked the Obama-era rules.

That revocation order -- named the Restoring Internet Freedom Act -- reclassified broadband as an “information” service, and the FCC has only limited jurisdiction over information services.

“Only the invocation of federal regulatory authority can preempt state regulatory authority,” Schroeder wrote. “By classifying broadband internet services as information services, the FCC no longer has the authority to regulate in the same manner that it had when these services were classified as telecommunications services.”

The judges also rejected the argument that only the federal government can issue rules regarding broadband.

“The FCC itself recently acknowledged the states’ role in, among other things, policing fraud, taxation, general commercial dealings, and enforcing fair business practices in the field of interstate broadband services,” Schroeder wrote. “The realities of today show a dual-system of regulation that refutes the service providers’ argument.”

A spokesperson for the industry groups said they were disappointed and will review their options.

“Once again, a piecemeal approach to this issue is untenable and Congress should codify national rules for an open internet once and for all,” the spokesperson stated.

After the FCC revoked the former rules, several other states -- including Vermont and Washington -- passed their own version of net-neutrality regulations. 

Former FCC Chairman Ajit Pai, who shepherded the repeal of the Obama-era rules, called them “heavy handed” and claimed that they depressed investment.

But net neutrality proponents say rules are necessary to prevent broadband providers from limiting consumers' ability to access streaming video, search engines and other online services and content.

Advocacy group Public Knowledge, which supports net neutrality, praised the ruling as a victory for internet users.

“The court rightly found that when a federal agency determines that it has no authority over a service, it necessarily also loses the ability to preempt state laws on that topic,” John Bergmayer, the group's legal director, stated.

He added: “When the FCC has its full complement of commissioners, it should put into place rules at least as strong as California’s nationwide, making some state measures unnecessary.”

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