DOJ Suit over California Law Creates Uncertainty as to the Future of Net Neutrality
Last month (September 2018), California Governor Jerry Brown signed California S.B. 822, enacting the California Internet Consumer Protection and Net Neutrality Act of 2018 1 (the “Act”). The Act will take effect on January 1, 2019, and aims to restore the Obama-era internet access regulations first adopted by the Federal Communications Commission (“FCC”) in 2015. The FCC, in a highly controversial move, repealed the regulations in June 2018.
The Act prohibits internet service providers (“ISPs”) from engaging in several discriminatory practices with respect to internet access. Specifically, the Act prohibits ISPs, with few exceptions, from “throttling” internet service—that is, ISPs may not block or degrade internet access on the basis of content, application, service, or device. The Act also prohibits ISPs from creating “fast-lanes” for certain web content by making it unlawful for ISPs to charge fees for quicker connections. Additionally, in an expansion of the FCC’s 2015 regulations, the Act bans “zero-rating” in exchange for value from internet content providers. “Zero-rating” is the practice whereby an ISP exempts an internet user’s data usage from that user’s data usage allowance for a given period when the user accesses the content of a certain internet content provider.
The Act, however, has not gone unchallenged. On the same day that Governor Brown signed S.B. 822, the U.S. Department of Justice (“DOJ”) sued the State of California in the U.S. District Court for the Eastern District of California, challenging the constitutionality of the Act and sparking what is likely to become a battle over the power of the federal government to preempt state net neutrality laws. The DOJ argues that the Act is unconstitutional because the internet, as an interstate information service, can be regulated only by Congress (or, in this case, the FCC, the agency to which Congress has delegated regulatory power in this area). The DOJ also claims that state regulation of internet access and traffic could create an inefficient patchwork of potentially conflicting laws among different state and local jurisdictions across the country.
Proponents of the Act argue that net neutrality is essential to promote free speech, and that permitting ISPs to regulate internet traffic could have anticompetitive effects and may encourage consolidation among ISPs. Opponents of net neutrality believe that heavy regulation of ISPs will stifle investment and increase taxes.
Three other states—Washington, Oregon, and Vermont—have enacted net neutrality legislation since the FCC’s rollback of the Obama-era regulations. Unlike the Act, these states’ laws do not directly regulate ISPs. Instead, the statutes require government offices in those states to purchase internet service only from those ISPs that adhere to net neutrality rules—a requirement that forces ISPs operating in those states to choose between adopting the principles of net neutrality and losing lucrative government contracts. In addition to the three states that have passed formal legislation, governors in at least six states have used their executive power to adopt some measure of net neutrality, and lawmakers in more than two dozen states have introduced legislation directed at restoring net neutrality. Among the states that have taken steps to ensure net neutrality, California, through the Act, has taken the strongest stance, and is the first to directly regulate ISPs.
While both proponents and opponents of net neutrality have vowed to aggressively pursue their respective platforms, it is unclear how the court will rule on the DOJ suit, and whether its decision will affect the power of states to regulate internet access. There is also a challenge to the FCC’s repeal of its 2015 net neutrality regulations pending in the U.S. District Court for the District of Columbia, so it is likely that a federal court will opine on net neutrality, in some form, in the near future. Until then, both ISPs and internet users, alike, face uncertainty as to the future of net neutrality.
1 S.B. 822 (Cal. 2018). The Act can be viewed here.