Deregulating Net Neutrality: The States’ Response

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By: Ellen Larson
Associate Editor, American Journal of Trial Advocacy

On December 14, 2017, the Federal Communications Commission (“FCC”), in an order titled Restoring Internet Freedom, set to be effective April 23, 2018, voted to reverse the regulatory approach it adopted in its 2015 order titled Protecting and Promoting the Open Internet.[1] The 2015 Open Internet Order promulgated regulation seeking to ensure “equal access to the Internet, a concept known as ‘net neutrality.’”[2] Among its provisions, the FCC classified broadband access as a telecommunications service, which subjected it to a “common carrier” provision that barred Internet Service Providers (“ISPs”) from charging customers based upon how broadband was to be used.[3] However, the recent order reinstated the pre-2015 classification of broadband as an information service, thus removing the restrictions.[4] In a statement regarding the order, FCC Chairman Ajit Pai stated the 2015 rules impeded innovation and restricted competition by removing incentives for ISPs to create high-speed broadband.[5] On the other hand, advocates for net neutrality regulation have argued that, absent regulation, ISPs could discriminate by charging users more for certain content and faster connections.[6]

Federal Preemption?

In response to the FCC’s order, many states have attempted to circumvent the FCC’s rules by way of executive orders, legislation, litigation, and other local efforts.[7] However, the FCC specifically prohibited these actions in its order.[8] The 2017 order stated, “[R]egulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork that includes separate state and local requirements . . . [w]e therefore preempt any state or local measures that would effectively impose rules or requirements that we have repealed . . . .”[9] Nonetheless, state legislators argue they would have a good argument to defend their actions in court if the FCC were to challenge them.[10] Those legislators point to a March 2016 decision by the Sixth Circuit Court of Appeals which stated the FCC did not have the authority to preempt state laws in Tennessee and North Carolina that prevented municipal-owned broadband networks from expanding.[11] Offering further support, telecommunication lawyers have suggested there is no federal preemption in this case because the recent order did not formulate any substantive rules.[12] These lawyers further argued federal preemption is only possible if there is some conflicting legislation or regulation.[13] Along this line of thought, state legislators have conceded that there likely would be a better argument for federal preemption if there was federal legislation discussing the subject.[14] However, to date, Congress has not passed any net neutrality legislation.[15] Furthermore, states appear willing to take their chances on the existence of any such preemption.[16]

State Executive Orders

Governors in Montana, New Jersey, New York, Hawaii, and Vermont have all issued executive orders embracing net neutrality principles.[17] On January 22, 2018, Montana became the first state to have its governor sign an executive order requiring ISPs with state contracts to abide by net neutrality principles.[18] The governor’s executive order requires ISPs not to engage in blocking, throttling of web content, or creating internet fast lanes, all of which were banned under the FCC’s 2015 order.[19] Next, on January 24, 2018, New York’s governor, Andrew Cuomo, signed an executive order, which requires state officials to purchase Internet service only from ISPs that abide by the principles of net neutrality.[20] Then, on February 5, 2018, Hawaii Governor David Ige signed an executive order mandating Hawaii’s state agencies to only contract with broadband providers that promise to adhere to net neutrality principles and meet additional  state’s requirements, including allowing customers to access “all lawful content and applications” and “treat all data fairly without favoring or blocking particular products or websites.”[21] Following Hawaii on February 6, 2018, New Jersey Governor Phil Murphy signed an executive order requiring any ISP doing business with that state to adhere to net neutrality principles.[22] Last, on February 15, 2018, Vermont’s Governor, Philip Scott, became the fifth governor to sign an executive order requiring ISPs contracting with the state to uphold net neutrality protections.[23]

State Legislation

While the executive orders only apply to state contracts, states have also attempted to pass state legislation to enforce net neutrality for private contracts between consumers and ISPs.[24] On March 5, 2018, Washington, home to giant tech companies such as Amazon and Microsoft, became the first state to enact a net neutrality law.[25] Washington’s law directly regulates ISPs by imposing strict requirements, such as requiring them “to disclose information about their management practices, performance, and commercial terms.”[26] The net neutrality law also prohibits ISPs from favoring certain sites and apps over others.[27] In addition, Oregon’s  legislature has approved similar requirements but is currently awaiting the governor’s signature.[28] Oregon’s law does not impose any new requirements on ISPs, but like the executive orders, it “would stop state agencies from buying internet service from any company that blocks or prioritizes specific content or apps.”[29] Furthermore, approximately twenty-seven (27) other states are at different stages in the legislative process to adopt net neutrality regulations.[30]

Multi-State Lawsuit

In addition, states’ most direct approach to challenging the FCC’s order has been by a consolidated lawsuit, which was filed on January 16, 2018 by the Attorneys General of twenty-one (21) states and the District of Columbia.[31] The lawsuit claims “the FCC’s order is “arbitrary, capricious, and an abuse of discretion” within the meaning of the Administrative Procedure Act, violates federal law, . . . the Constitution, the Communications Act of 1934 and FCC regulations, . . . conflicts with the notice-and-comment rulemaking requirements of 5 U.S.C. § 553, and is otherwise contrary to law.”[32]

On March 8, 2018, the states’ lawsuit was consolidated with eleven other lawsuits also filed against the FCC by consumer advocacy groups, tech companies, and other groups.[33] The consolidated lawsuit will be heard by the Ninth Circuit Court of Appeals.[34] Most recently, on March 22, 2018, “the Internet Association, a lobby group for Amazon, Google, Facebook, Netflix, and other Web companies,” submitted a motion to participate in the lawsuit as an intervenor.[35]

Local Efforts

Lastly, there have been a number of efforts at the local level challenging the FCC’s 2017 order. First, even before the order was released, on December 7, 2017, 68 mayors and county elected officials signed a letter addressed to the FCC to oppose the FCC’s proposed order.[36] In the letter, they argued the order “would lead to greater digital inequality, harm small-business growth, and violate principles of local control.”[37] In addition, after the order had been adopted, on March 8, 2018, “New York City Mayor Bill De Blasio announced the formation of Mayors for Net Neutrality, a coalition dedicated to preserving net neutrality.”[38] As of March 25, 2018, the coalition included 22 mayors who pledged to “only do business with ISPs who uphold proponents of a free and open Internet.”[39] Most notably, these mayors have pledged to defend net neutrality by using their economic leverage rather than using regulation.[40] Finally, an effort many municipalities have embraced is becoming an ISP itself, funded by tax dollars.[41] Currently, over 100 municipalities in the United States have developed public-owned “municipal broadband” networks, which provide gigabit-speed Internet at a low cost to its residents.[42]

Moving Forward: Who has the final say?

As states have responded to the FCC’s 2017 order by executive order, legislation, legal action, and local action, major ISPs like AT&T, Verizon, and Comcast are looking at facing various state-by-state net neutrality regulations.[43] USTelecom, a major trade association for AT&T and Verizon, has advocated for Congress to enact legislation to settle the debate once and for all.[44] USTelecom stated: “It’s time for Congress to step up and enact legislation to make permanent and sustainable rules governing net neutrality.”[45] Likewise, Broadband for America, a lobbying group for internet providers such as Comcast and Cox Communications, issued a similar demand.[46] On the other hand, critics of ISP’s lobbying efforts have claimed these trade association and lobbying groups just want legislators to pass a bill which does not set any regulations but does preempt states and municipalities from taking action, calling it a “fake net neutrality law.”[47] However, either way, efforts to pass legislation in Congress appear to have stalled.[48] Therefore, at least for now, it looks like it will be up to the courts to determine whether states can pass their own net neutrality regulation.


[1]Declaratory Ruling, Report and Order, and Order (Dec. 14, 2017), https://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0223/FCC-17-166A1.pdf [2017 order]; Restoring Internet Freedom, A Rule by the Federal Communications Commission on 02/22/2018, Federal register (Feb. 22, 2018), https://www.federalregister.gov/documents/2018/02/22/2018-03464/restoring-internet-freedom; Report and Order on Remand, Declaratory Ruling, and Order (Feb. 26, 2015), https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.pdf [2015 order].

[2]Andrew Nusca, Net Neutrality Explained: What It Means (and Why It Matters), Fortune (Nov. 23, 2017), http://fortune.com/2017/11/23/net-neutrality-explained-what-it-means-and-why-it-matters.

[3]Id.

[4]2017 order, supra note 1.

[5]Statement of Chairman Ajit Pai, https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-166A2.pdf.

[6]Nusca, supra note 2.

[7]Paul Resnikoff, 36 States — Representing Nearly 70% of the Country’s Population — Are Fighting the Net Neutrality Repeal, Digital Music News (Mar. 19, 2018), https://www.digitalmusicnews.com/2018/03/19/us-states-net-neutrality-resistance.

[8]Natalie Delgadillo, Some States Want to Save Net Neutrality, But Can They?, Governing (Jan. 23, 2018), http://www.governing.com/topics/mgmt/gov-net-neutrality-state-legislation-montana.html.

[9] 2017 order, supra note 1.

[10]Delgadillo, supra note 8.

[11]Sean Captain, Snubbing FCC, States Are Writing Their Own Net Neutrality Laws, Fast Company (Jan. 2, 2018), https://www.fastcompany.com/40510095/snubbing-fcc-states-are-writing-their-own-net-neutrality-laws (citing Tennessee v. Fed. Comm. Commission, No. 15-3291/3555 (6th Cir. 2016), https://apps.fcc.gov/edocs_public/attachmatch/DOC-340741A1.pdf).

[12] See Bennett Ross, Expert Analysis: Congressional Review Act Cannot Restore Net Neutrality, LAW360 (Mar. 22, 2018), https://www.law360.com/articles/1025266

[13]Delgadillo, supra note 8; see also Ross, supra note 12 (“[The] classification decision was the result of an adjudication and is embodied in an order, not a ‘rule’.”).

[14]Delgadillo, supra note 8.

[15]See Marguerite Reardon, GOP Senator Proposes Net Neutrality Fix, But Critics Cry Foul, cnet (Mar. 8, 2018, 12:01 PM), https://www.cnet.com/news/gop-senator-proposes-bill-net-neutrality-fix (discussing how both proposed bills from Democrats and Republicans do not have enough support to pass).

[16]Delgadillo, supra note 8.

[17]Paul Resnikoff, 7 U.S. States (Representing Nearly 25% of the Country’s Population) Have Passed Measures Protecting Net Neutrality, Digital Music News (Feb. 16, 2018), https://www.digitalmusicnews.com/2018/02/16/7-states-vermont-net-neutrality-fcc.

[18]Harper Neidig, Montana Becomes First State to Implement Net Neutrality After FCC Repeal, The Hill (Jan. 22, 2018, 2:15 PM), http://thehill.com/policy/technology/370133-montana-becomes-first-state-to-implement-net-neutrality-rules-following-fcc.

[19]Id.

[20]Brian Fung, Defying the FCC, New York’s Governor Has Signed an Executive Order on Net Neutrality, The Washington Post (Jan. 24, 2018), https://www.washingtonpost.com/news/the-switch/wp/2018/01/24/defying-the-fcc-new-yorks-governor-has-signed-an-executive-order-on-net-neutrality/?utm_term=.90f557a54fc2.

[21]Wendy Davis, Hawaii Becomes Fourth State to Require Net Neutrality, MediaPost (Feb. 6, 2018), https://mediapost.com/publications/article/314144/hawaii-becomes-fourth-state-to-require-net-neutral.html.

[22]Paul Resnikoff, 4 U.S. States (Representing 1/5th of the Country’s Population) Have Passed Measures Protecting Net Neutrality, Digital Music News (Feb. 6, 2018), https://www.digitalmusicnews.com/2018/02/06/fifth-usa-population-protecting-net-neutrality.

[23]Xander Landen, Scott Signs Executive Order on Net Neutrality, VTD (Feb. 15, 2018), https://vtdigger.org/2018/02/15/scott-signs-executive-order-net-neutrality.

[24]Resnikoff, supra note 7.

[25]Brian Fung, Washington State’s Net Neutrality Law Is the Beginning of a Big Headache for Internet Providers, The Washington Post (Mar. 6, 2018), https://www.washingtonpost.com/news/the-switch/wp/2018/03/06/washington-states-net-neutrality-law-is-the-beginning-of-a-big-headache-for-internet-providers/?utm_term=.d183ff893c0e; Geoff Duncan, Can U.S. States Hang on to Net Neutrality?, Tidbits (Mar. 9, 2018), http://tidbits.com/article/17837.

[26] Rachel La Corte, Washington Becomes 1st State to Approve Net-Neutrality Rules, Associated Press (Mar. 6, 2018), https://apnews.com/952670864bd54df2953ee5f43432230e/Washington-becomes-1st-state-to-approve-net-neutrality-rules.

[27]Id.

[28]Resnikoff, supra note 7.

[29]Tom Jones, Net neutrality bill passes Oregon Legislature, Associated Press (Mar. 2, 2018), https://www.apnews.com/20390f3992e441a7a57bb7eea785f7ad/Net-neutrality-bill-passes-Oregon-Legislature

[30]Kevin Litman-Navarro, These Maps Show All the Cities and States Now Defending Net Neutrality, Inverse Culture (Mar. 16, 2018), https://www.inverse.com/article/42443-net-neutrality-maps.

[31]Jon Brodkin, FCC Must Defend Net Neutrality Repeal in Court Against Dozens of Litigants, ars technica (Mar. 12, 2018), https://arstechnica.com/tech-policy/2018/03/fcc-must-defend-net-neutrality-repeal-in-court-against-dozens-of-litigants; Duncan, supra note 23.

[32]Karl Bode, 22 State AGs Sue FCC for its Attack on Net Neutrality, DSLReports (Jan. 16, 2018) (quoting Brief for Petitioner, New York v. FCC, No. 17-18-1013 (D.C. Cir. 2018)), https://www.dslreports.com/shownews/22-State-AGs-Sue-FCC-For-its-Attack-on-Net-Neutrality-141065.

[33]Brodkin, supra note 31 (citing Consolidation Order, MCP No. 150, Mar. 8, 2018) Advocacy groups include those such as Free Press and Coalition for Internet Openness; tech companies include those such as Mozilla and Vimeo, and other groups, include those such as the National Hispanic Media Coalition, Etsy, Kickstarter, Foursquare Labs, and the California Public Utilities Commission

[34]Id.

[35]Kevin Litman-Navarro, Net Neutrality Repeal Challenged by Internet Association in New Lawsuit, Inverse Culture (Mar. 22, 2018), https://www.inverse.com/article/42678-net-neutrality-internet-association-fcc; Brodkin, supra note 31.

[36]Natalie Delgadillo, Net Neutrality Repeal Could Be Bad News for Cities, Mayors Warn, Governing (Dec. 8, 2017), http://www.governing.com/topics/urban/gov-net-neutrality-repeal-local-response-mayors.html.

[37]Id.

[38]Kevin Litman-Navarro, NYC’s Mayor Announces City Coalition to Protect Net Neutrality, Inverse Culture (Mar. 12, 2018), https://www.inverse.com/article/42174-nyc-mayor-announces-net-neutrality-coalition.

[39]See To Mayors, Freepress, https://act.freepress.net/sign/mayorsfornetneutrality/?source=FPblog (listing mayors in the coalition); Litman-Navarro, supra note 38.

[40]Litman-Navarro, supra note 38.

[41]Resnikoff, supra note 7.

[42]Id.; Municipal Broadband Roadblocks, Broadband Now (Sept. 2, 2016) https://broadbandnow.com/report/municipal-broadband-roadblocks-by-state.

[43]Marsha Silva, Verizon, AT&T & Comcast Are Trying to Ban State Neutrality Laws, Digital Music News (Mar. 18, 2018), https://www.digitalmusicnews.com/2018/03/18/net-neutrality-repeal-fcc-isp.

[44]Id.

[45]Id.

[46]Id.

[47]Karl Bode, AT&T Lobbyists Threaten States Attempting to Protect Consumers, DSLReports (Mar. 28, 2018), http://www.dslreports.com/shownews/ISP-Lobbyists-Promise-to-Fight-State-Net-Neutrality-Efforts-141511.

[48]Reardon, supra note 15.

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