ACA Connects made its case to a federal appeals court Tuesday (Sept. 14) that broadband providers should not face a “patchwork of conflicting state regulations” on broadband access, including to a majority of judges who said they had issues with how the FCC reclassified broadband as an information service and pre-empted state regulation that differed from that approach.
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That came in oral argument in the 9th U.S. Circuit Court of Appeals in ACA Connects v. Rob Bonta. The trade group representing smaller, independent cable operators had challenged a lower court's refusal to grant it a preliminary injunction blocking California's network neutrality law, the California Internet Consumer Protection and Net Neutrality Act of 2018.
California's bill was a response to the Federal Communications Commission's 2017 decision under Republican chairman Ajit Pai to eliminate the FCC's open internet rules and reclassify access as an information service under Title I of the Telecommunications Act of 1996 not subject to common carrier rules.
The ACAC case was heard by a three-judge panel of the court, Judges Mary M. Schroeder, J. Clifford Wallace and Danielle J. Forrest.
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The state of California vigorously defended the law against what it said was an FCC policy decision that did not square with statute.
ACAC's lawyer, Scott Angstreich of Kellogg Hansen, told the court that providers faced the prospect of 50 different sets of rules for streaming Netflix shows or accessing Zoom calls or relaying national news to customers in different states.
Angstreich said that the FCC concluded that Title I is the best regime for ensuring an open internet and that, further, using a Title II common-carrier regime would harm the internet.
He pointed out that the court has already found that when the FCC regulates interstate services (such as broadband access) under Title I, the regulation of intrastate services, like broadband in California only, is pre-empted if it undercuts that federal regime. ACAC argues the California rule does just that, since it imposes the same rules the FCC found harmed an open internet when it classified broadband access as a Title I service.
Judge Schroeder said she was struggling with what FCC pre-emption authority flows from simply reclassifying a service.
Angstreich said the FCC had the authority to figure out the best way to regulate broadband, and chose the best statutorily sound way to do that, including the pre-emption of intrastate regulation that conflicted with its approach.
Judge Forrest said she was also struggling. She said she didn't read the statute as meaning that deciding which category to put a service in was a policy choice.
Judge Schroeder pointed out that California has other consumer protection statutes. Supposing the court agreed that the net neutrality statute is pre-emptive and someone sued a provider who tried to block access or unfairly charged for access in a way that violated consumer protection laws as an unfair business practice, she asked, would that also be pre-empted?
Angstreich said current consumer-protection laws enforce promises by broadband providers, and that if they promised not to block and did, enforcement would not be pre-empted. What would be pre-empted, he said, would be regulating access differently from the federal regime, as California is trying to do.
Judge Wallace suggested that rather than continue the preliminary injunction, the appellants might want to simply press for a decision on the underlying case, then seek a permanent injunction, pointing out that the judges' time is limited.
Angstreich said that because the preliminary injunction was denied, his clients are facing the very harms it identified in seeking that injunction, so waiting until the final judgment creates “real and pressing” harms.
At least in terms of pre-emption questions, ACAC says there is no factual development left on that issue “and the harm persists,” Angstreich said.
Patty Lee, the lawyer for California, defended the law and its prevention of blocking, throttling and some paid prioritization, which are the practices the FCC’s scrapped net neutrality rules prevented.
Without those “essential protections,” she said, broadband providers can “discriminate against content providers they disagree with or charge them fees for reaching internet users.”
Lee also said that case law did not support pre-emption unless backed by ancillary authority, authority which she said the FCC did not sufficiently establish.
She invoked the COVID-19 pandemic to argue that no one can doubt the value of an open internet with so many people online. Immediate access to information, like on California wildfires, can be a matter of life and death, she said.
To that point, she argued that states are the primary protectors of their citizens' health and safety and don't need “prior federal authorization” to do so, “especially when it comes to a basic necessity like access to the internet.”
She said there was no conflict between California's law and the FCC’s 2018 order reclassifying the internet under Title I and eliminating the rules against blocking, throttling and paid prioritization.
Asked by Judge Schroeder about the policy issue, she said the FCC's decision might reflect policy, but that does not mean the decision has pre-emptive effect, which flows from the statute and not the policy. Under Title I, she said, both the FCC and the states have the authority to regulate broadband.
Schroeder said if the court concluded it was a policy decision, there would be a direct conflict because there is a totally different policy approach, i.e. no need for bright-line rules against blocking, throttling and paid prioritization (FCC), versus a definite need for bright-line rules (California).
Lee said that an agency can't regulate — and certainly can’t pre-empt — on policy preferences alone. She said the classification decision should not be a way to get around the statutory language that says the FCC only has ancillary regulatory authority under Title I.
Schroeder asked if Lee thought there was any way the FCC could take a deregulatory approach to internet regulation that would pre-empt state efforts to do the opposite.
Lee said that the agency could reclassify broadband access under Title II, though she conceded that comes with regulations that "generally should be imposed on common carriers," then forbear from enforcing some of those rules.
In effect, Lee was suggesting that the prior approach of net neutrality regulations under Title II with forbearance of rate regulation, among other things, was that deregulatory approach — something ISPs would definitely take issue with.
In rebuttal, Angstreich said the 9th Circuit has already held that the FCC can pre-empt under Title I, including state laws that get into the FCC's intrastate regulatory lane.
"When a state copies the FCC's definition and tries to regulate the exact same service as the FCC in a way that the FCC has held is harmful to broadband deployment, and unnecessary to internet openness," he told the court, "it is pre-empted."
ACAC had no comment on the oral argument.
"It is always dangerous to draw broad inferences from oral argument, especially when there is only 15 minutes per side," said veteran attorney Andrew Jay Schwartzman, “but the panel did seem skeptical about the pre-emptive effect of the FCC's action in light of the Mozilla holding.”
