Net Neutrality Litigation Hangs Over Maryland Bill at Hearing

ANNAPOLIS -- Maryland shouldn’t wait for courts to rule on net neutrality before moving ahead with a law to restrict procurement to companies that follow such rules, Maryland Del. Kirill Reznik (D) told us Wednesday after the House Economic Affairs panel heard testimony on his net neutrality and ISP privacy bill (HB-141). Telecom and cable industry witnesses advised the state to wait at least until a ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which heard argument last week on the FCC net neutrality order (see 1902010046). A House Communications Subcommittee hearing is Thursday (see 1902060036).

The state bill would prohibit state contracts with ISPs that violate net neutrality rules like those rescinded by the commission and revive FCC privacy rules for ISPs that were repealed by Congress. It would take effect June 1. It wouldn’t materially affect state or local finances or operations, with impact to small businesses “minimal,” said a fiscal note dated Tuesday. Reznik sponsored the same bill last year; it got through the House but stalled in the Senate (see 1804130040). If HB-141 can clear both Democratic-controlled chambers this year, it would need the signature of Gov. Larry Hogan, a recently re-elected Republican who differs at times with the national GOP. Hogan didn’t comment.

“To make the argument that we have to wait until any and all potential court challenges are resolved before we act is silly,” Reznik said in an interview. California froze enforcement of its law (see 1810260045) because its comprehensive net neutrality rules were challenged, but HB-141 is a more limited procurement bill and Maryland hasn't been challenged, he said.

The committee could vote on the bill at a future meeting or send it to a subcommittee to weigh amendments, Reznik said. Last year’s bill died in the Senate due to lack of a champion in that chamber and not enough time, said the lawmaker, conceding he lacks a Senate co-sponsor. Hogan’s support will depend on how he believes it will affect his popularity ratings, the Democrat said.

The Economic Affairs panel’s OK is no sure thing even though the same proposal cleared this committee last year, said Reznik. He had a co-sponsor on the committee last year, but that member -- Bill Frick (D) -- didn’t return to the legislature this year. Support is hard to gauge with committee turnover, he said.

Privacy and net neutrality rules could be broken into separate bills if needed to get support, Reznik said. “Potentially, we could split them up, deal with privacy as a separate issue and maybe just pass net neutrality this year.”

Pre-Emption

"Pre-emption is not a concern with this bill,” said Maryland Assistant Attorney General Richard Trumka at the hearing. The FCC can’t pre-empt what it doesn’t regulate, and the commission gave up its authority in the 2017 order, Trumka said. The AG's office is part of the multistate Democratic AG challenge against the FCC and supports HB-141.

National wireless, wireline and cable groups lined up against state ISP and net neutrality rules at Wednesday’s hearing, saying they’re unnecessary and pre-empted by the FCC. At minimum, wait until federal litigation is resolved, said Patrick Halley, USTelecom senior vice president-advocacy and regulatory affairs. Even state procurement laws are pre-empted by the order, said cable lawyer Matthew Brill of Latham and Watkins. States are constitutionally barred from using their role as market participants to impose general regulations, he said. California is waiting to see what happens in court, and other states should do likewise, Brill said.

Bills "scream out" to tech companies that they should leave the state, said DLA Piper’s Tami Howie for Maryland’s Innovation Coalition, representing drone, biotech and other technology companies. Complying with multiple state laws will increase costs for ISPs, hurting investment, said Free State Foundation Research Fellow Michael Horney.

The bill proposes to address federal issues, warned Del. Chris Adams (R). It’s wrong to say industry investment decreased after the FCC order, said Del. Mark Fisher (R), who grew angry as he challenged Trumka and a Common Cause witness who said companies are spending less. Republicans said net neutrality rules could stifle rural broadband investment and questioned why privacy rules didn’t cover websites like Facebook. On privacy, Reznik replied he’s open to regulating web platforms, but it’s easier for Maryland to regulate ISPs that have physical presence there. The state AG isn’t against privacy rules covering websites but believes it already has that authority under existing consumer laws, said Trumka.

Committee newcomer Del. Kathleen Dumais (D) asked if Reznik had seen any problems from ISPs and why the legislature should act before judicial resolution. Reznik said he hadn’t seen problems yet, but it won’t harm anything to have rules to prevent them. Many states having laws will pressure the federal government to make national rules, he said.

Maryland is one of more than a dozen states weighing net neutrality bills this year (see 1901230008). Tuesday, the Connecticut Joint Committee on Energy and Technology voted to draft SB-6, which means the proposal by state Sen. Robert Duff (D) will be drafted as a full committee bill. Last week, the Hawaii Senate Technology Committee voted 3-0, with two members excused, to clear SB-253. The Democratic bill is pending in the Commerce, Consumer Protection and Health Committee. Tennessee Democrats introduced net neutrality legislation Wednesday in the House and Senate.

California and Washington state last year enacted comprehensive rules, while Oregon and Vermont limited procurement. Montana, New York, New Jersey, Hawaii, Rhode Island and Vermont have executive orders that similarly limit state contracts. DOJ sued California, and USTelecom and other industry groups sued California and Vermont. U.S. District Court in Burlington Wednesday granted Vermont’s request (in Pacer) for a one-week extension until Feb. 13 to reply to industry opposition to the state's motion to dismiss (see 1901250042).