Some Doubt Lawsuits Against Expected Colorado Net Neutrality Law

With Colorado poised to enact net neutrality legislation, observers said the state might be less likely than others to attract a lawsuit. Longtime net neutrality supporter Colorado Gov. Jared Polis (D) is expected to sign SB-78 to restrict high-cost support or other state broadband funding to companies that adhere to open internet principles, and require government entities give preference in procurements to ISPs that follow rules.

“This legislation will ensure a free and open internet, particularly for rural communities,” sponsor Sen. Kerry Donovan (D) said in a Monday statement after the House voted 41-22 last week to approve. The Senate voted 19-15 earlier this month. No Republicans voted for SB-78 in either chamber. Polis, reported to support the bill, has 10 days to sign or veto after the bill reaches his desk. The governor didn’t comment.

The bill protects taxpayer dollars from supporting blocking or throttling, said co-sponsor Rep. Chris Hansen (D) in a statement. “Republicans in Congress are blocking net neutrality protections, so it’s on states like Colorado to act. This bill is a critical tool that can ensure the internet remains open.”

Donovan and Hansen "took great pains to keep the bill narrow and navigate away from the ‘sue us, please’ expansiveness of states like California," emailed Wilkinson Barker attorney Ray Gifford, a former Colorado Public Utilities Commission chairman. "While the carriers might not be thrilled with the Colorado bill, it attempts to stay within acknowledged state legal prerogatives to lessen the legal jeopardy it puts the state in." National telecom associations that sued California and Vermont over net neutrality laws didn’t comment.

It’s hardest for opponents to attack measures that are tied to the state’s power to issue grants or as a purchaser, said Public Knowledge Senior Counsel John Bergmayer. “It doesn’t mean they won’t try.” California and Vermont got sued, but parties agreed to put cases and enforcement of the state laws on hold pending a decision on the 2017 FCC order by the U.S. Court of Appeals for the D.C. Circuit, he said. Public Knowledge supports state open-internet bills, which provide protections and send a powerful political message to national policymakers, Bergmayer said.

ISPs might not sue because the bill’s practical impact looks small, said Ken Fellman, a Colorado attorney for local governments. The state wouldn’t determine net neutrality violations; the bill relies instead on consumers filing federal complaints, he said. “Somebody would have to file a complaint with the FTC,” then the commission or a court would have to find there was a violation, Fellman said. It’s tough to enforce a requirement agencies give preference to net-neutral providers in procurements, he said. That seems unlikely to stop a local government from accepting a cheaper bid from an ISP that doesn’t follow such rules, Fellman said. The bill remains “an important statement” that, with other state measures, sends a message to Congress, he said.

“It’s a closer call than … the California law, and might not be litigated, especially since providers in rural areas (typically smaller providers) are most affected by the bill,” emailed Brent Skorup, Mercatus Center senior research fellow. He testified against the bill (see 1903280058). “However, since the Colorado bill is regulatory in nature -- it isn’t narrowly focused on ISP services provided to state agencies -- and undermines federal law and policy, I think the bill would likely be struck down if passed and litigated.”

The federal government would have good reason to sue Colorado, emailed American Legislative Exchange Council Communications and Technology Task Force Director Jonathon Hauenschild. “The different approach of the Colorado bill will probably make it more vulnerable to lawsuits because targeting broadband funding [frustrates] federal laws directing both the states and federal government to remove barriers rather than erect them." The 2017 FCC order’s pre-emption clause is broad enough to cover SB-78, and existing law prohibits states from using its position as a market participant to make policies that otherwise wouldn’t be allowed, the ALEC official said. Adding regulatory barriers to broadband deployment violates federal laws including Section 230 of the Communications Decency Act and Section 1302 of the Communications Act, he added.

“It’s hard to know where net neutrality will land because courts have yet to rule on the merits of the cases in California and Vermont,” emailed Colorado Common Cause Executive Director Amanda Gonzalez. “Colorado’s bill differs from Vermont’s in that it ties net neutrality to broadband deployment funding, which is undoubtably within the state’s authority.” ISPs "are likely to engage in litigation no matter what,” she said.

“To the extent that the net neutrality restrictions are linked tightly only to those providers receiving funds under the state grant program, the law may be more likely to be sustained than one that more broadly applied to any ISP offering service,” emailed Free State Foundation President Randolph May. “Another state law just reinforces the need for Congress to act to preempt these state laws in favor of a national framework.”