Some States Want to Save Net Neutrality, But Can They?

On Monday, Montana became the first to reinstate some of the rules the FCC repealed. The question of whether states have the right to do that, however, will likely end up in court.
by | January 23, 2018
A protester near the Federal Communications Commission. (AP/Carolyn Kaster)

Since the Federal Communications Commission (FCC) repealed net neutrality rules last month, some governors and lawmakers have taken steps to restore those regulations in their states.

On Monday, Montana became the first to make it official: Gov. Steve Bullock signed an executive order requiring internet service providers (ISPs) with state contracts to abide by the FCC's old rules requiring providers to treat all internet content equally with regards to access and download speeds.

Lawmakers in California, New York, Rhode Island, Nebraska, Washington and Massachusetts have also introduced similar bills to varying degrees of reach.

But it’s possible that anything states pass on this issue won’t pass legal muster in court.

In 2015, under the Obama administration, the FCC enacted rules to ensure that ISPs, like Comcast and Verizon, could not slow or block access to any websites -- especially not for business advantage or monetary gain. (Before net neutrality rules were put in place, there were a few major cases of telecommunications companies doing just that.) But this past November, FCC Chairman Ajit Pai announced his intention to repeal those rules and reclassify the internet as an “information service,” curbing the federal government’s ability to oversee and regulate it. In December, FCC commissioners voted 3-2 to overturn net neutrality rules, with the Republican commissioners voting in favor of the move and the two Democrats opposed.

The order from the FCC includes a provision that could be a big problem for states trying to take matters into their own hands: "We conclude that we should exercise our authority to preempt any state or local requirements that are inconsistent with the federal deregulatory approach we adopt today."

In other words, the FCC believes it has the final say on net neutrality. But not all legal scholars agree.

“It’s unclear [whether the FCC can preempt state laws]. The agency may have gone too far,” says Pantelis Michalopoulos, a partner at the law firm Steptoe and Johnson, and an expert in telecommunications law who has previously represented internet industry groups in net neutrality litigation.

Michalopoulos says that federal preemption is usually based on something -- some conflicting federal regulation or law that trumps state legislation.

“Here, we have an attempt to preempt state laws based on nothing, or virtually nothing, precisely because the FCC has decided not to promulgate substantive rules on [net neutrality],” Michalopoulos says. “This makes it a little more difficult for this kind of preemption to succeed.”

The uncertainty will likely lead to legal showdowns between states and the FCC.

In the past, court cases regarding the FCC’s ability to preempt state laws have gone both ways. The commission lost a 2015 case trying to preempt state laws on municipal broadband networks, but it was successful in preempting matters regarding voice over internet protocol, or VoIP services, such as Skype.

Lawmakers in many states appear willing to take their chances.

Washington state Rep. Drew Hansen, who introduced a wide-reaching net neutrality bill that would maintain all the protections the FCC rolled back, says he isn't concerned about preemption.

“The FCC claims it has the power to preempt state laws, but that doesn’t mean they actually do. I can claim I have the power to manifest unicorns on the capitol lawn, but if you look out your window in Olympia, there are no unicorns,” Hansen says. “People throw around words like ‘preemption’ like they’re magic.”

Hansen’s bill has been heard in committee, and he says it has bipartisan support.

California state Sen. Scott Wiener, who introduced a net neutrality bill in his state that mirrors Hansen's, agrees.

“We don’t feel the FCC has the power to preempt state laws. They have tried to preempt municipal broadband laws, and courts ruled they don’t have the power to do that,” says Wiener. “There will have to be litigation around preemption, but we think we have a very good argument.”

However, if Congress were to pass legislation on the matter, Wiener thinks the federal government would have a stronger case for preemption. So far, such legislation seems unlikely to pass in the House.

Some states -- Montana, New York and Rhode Island -- are taking a more cautious approach than California or Washington. They're all trying to circumvent federal preemption by crafting very specific and narrow regulations.

New York's bill, introduced by Assemblymember Patricia Fahy, requires compliance with net neutrality principles in order for ISPs to get any state contracts. The workaround means the state won’t be able to directly regulate what ISPs do for their consumers in the state, but Fahy hopes the contracts at stake will act as a deterrent for companies considering violating net neutrality.

“We are threading a very thin needle here, and we know we are threading a needle,” says Fahy.

In most of these states, the bills have bipartisan support. In Washington state, Hansen says that Republicans in some ways have the greatest interest in the bill because they represent rural areas where consumers often have only one internet service provider, making them vulnerable to changes in pricing and blocking or throttling.

Still, the bills do have their detractors.

Mark Jamison, a visiting scholar at the American Enterprise Institute, a conservative think tank, warns that states could be shooting themselves in the foot with this kind of legislation.

“I’d warn these states to think about what the consequences are for broadband development,” says Jamison. “What we saw at the federal level when they adopted [net neutrality rules] is that the investment in broadband went down. So states may be disadvantaging themselves by doing this.”

Other experts have disputed statistics about that underinvestment.

Even if states' net neutrality laws don't end up in court, the issue at large most certainly will: Earlier this month, 22 Democratic state attorneys general filed a lawsuit to block the FCC's repeal.