California, Vermont Net Neutrality Laws Face Return of Litigation

California’s net neutrality law could remain unenforced for months despite litigation resuming this week. A federal court set a schedule Thursday that would delay the state law at least until Q4, and it could be much longer if DOJ and industry win preliminary injunction against the state (see 2007300041). Timing remains hazy for enforcing Vermont’s frozen law. Net neutrality advocates say the U.S. Court of Appeals for the D.C. Circuit in Mozilla v. FCC allowed state laws; others disagreed.

Suits against California and Vermont open-internet laws may move forward now that Mozilla and others let pass a July 6 deadline to appeal to the Supreme Court (see 2007070012). California agreed not to enforce its comprehensive law until 30 days after the U.S. District Court of the Eastern District of California resolves preliminary injunction motions, which are due Wednesday. The court said it will schedule oral argument on the motions after it gets plaintiffs’ reply briefs due Oct. 14. DOJ and industry plaintiffs USTelecom, CTIA, NCTA and ACA Connects didn’t comment by Monday, nor did California Attorney General Xavier Becerra (D)'s office.

California's law “should be enforced now, but ultimately that will be determined by the attorney general and by the court,” said SB-822 author Sen. Scott Wiener (D) in an interview. California will “vigorously defend” in district court, after Mozilla resolved that “the FCC does not have the power to preempt California from protecting net neutrality,” he said. The senator didn’t cite any violations since the 2018 law was stayed. ISPs “have been on their best behavior because they know they are under a microscope,” he said. “If this law is overturned, so we have no state or federal net neutrality protections, that’s going to change. The financial incentive for the ISPs to abuse their position of power is huge.”

Vermont’s law and executive order remain on hold and under challenge by ISPs in the U.S. District Court of Vermont. Vermont limited state contracts to net-neutral providers. Under the parties’ stipulation and the court’s March 2019 order, defendants may not enforce the law or EO until 30 days after the July 6 deadline for seeking Supreme Court review -- Wednesday. The documents don’t appear to require Vermont to wait for motions to be resolved, but the state law’s author told us now that enforcement mightn't be imminent. AG T.J. Donovan (D) indicated in previous conversations that Vermont would wait until “any court cases are resolved,” said Sen. Ginny Lyons (D). She said she needs to confirm the status with the AG. Donovan’s office didn’t comment.

Donovan “simply could disclose whether network managers are in compliance,” while the case is pending, Lyons said. The lawmaker remains concerned about possible neutrality violations despite not hearing of any since the state law and executive order went on hold, she said. “The companies are waiting to see what direction things are going” and “have not rocked the boat for two years.”

Long Road

The California court battle could be lengthy, with appeal likely, observers said.

“Nobody is expediting this thing,” and with high-powered lawyers on both sides, “they can battle to a standstill for quite some time,” said former Assemblymember Lloyd Levine (D) in an interview. No “earthquake” has shaken the legal landscape between when the case began and now, said the senior policy fellow at the University of California, Riverside School of Public Policy. “Yes, the Mozilla ruling was out there, but we were waiting for the Mozilla ruling.” There’s not been any state or federal law change or new FCC rule on the issue, nor any fresh headlines of a big ISP engaging in practices that might violate California’s law, he said. COVID-19 pushed some internet issues to the forefront but more on the broadband access side, he said.

Wilkinson Barker’s Ray Gifford predicted the California court will enjoin enforcement. “Both the federal government and industry have the opportunity to mount strong arguments in favor of a new injunction, given the (1) disruption to a D.C. Circuit-upheld federal regulatory regime, and (2) likely-to-be-overturned obligations on industry, that SB 822 threatens,” the former Colorado Public Utilities Commission chair emailed.

Boston College Law School professor Daniel Lyons sees a challenge winning preliminary injunction: “The court’s going to be balancing the likelihood of success by the federal plaintiff against the risk of harm if the injunction is not granted. The difficulty for the feds on conflict preemption is that the court’s really going to want some evidence of what the actual conflict is.”

Local governments are watching the case closely. “We’re tracking the litigation and strongly support California’s position,” said Santa Clara County’s Lead Deputy County Counsel Laura Trice. The county made headlines in 2018 when it alleged Verizon throttled service to firefighters during the Mendocino Complex Fire (see 1808230034).

“States seeking to implement their own net neutrality are on firm legal ground” since the D.C. Circuit “ruled that the FCC does not have the authority to preempt states from enacting their own net neutrality laws,” emailed University of Pennsylvania communications school doctoral candidate David Berman. The idea that federal rules deterred ISP broadband spending was debunked, said the co-author of After Net Neutrality: A New Deal for the Digital Age, citing a 2019 economic paper by Alex Hooton of The George Washington University, Institute of Public Policy. Renewed effort to repeal California’s law is “a naked, petty money-grab by rapacious corporations who want to dismantle the open internet at the very moment that we need it the most.”

Decisions in Mozilla and the U.S. District Court of Maine case about the state's ISP privacy law “greatly strengthen California’s hand,” emailed Gigi Sohn, Georgetown Law Institute for Technology Law and Policy distinguished fellow. The Maine decision (see 2007070053) was “a particularly powerful indictment” of ISPs trying to free themselves from regulation at both state and federal levels, she said.

California and Vermont “don’t get much from Mozilla,” disagreed Gifford. “Federal law still controls.” The D.C. Circuit overturned the FCC order’s express preemption but Mozilla "also states that run-of-the-mill conflict preemption can still apply,” and field and express preemption can also apply, he said. States “can't regulate interstate broadband traffic, and it is not possible to identify purely intrastate broadband traffic.”

“Mozilla took an aspect” of preemption “off the table, but preserved a whole bunch of others,” emailed Mike Montgomery, executive director of CALinnovates, an advocacy group with partners including AT&T and Uber. The Maine privacy case is “apples and oranges” with the California matter, he said. “Hopefully we end up with a decision that supports a pro-consumer regime that recognizes internet traffic as inherently interstate.”

Election

The presidential election in less than 100 days could complicate litigation if presumptive Democratic nominee Joe Biden wins, Levine said. Biden, currently leading in national polls, probably would put together an FCC that would switch back to the Obama-era net neutrality policy, Levine said. Such a scenario would probably be quicker than federal legislators making a law, even if the Senate changes hands, the Democrat said.

Wiener hopes the FCC will reinstate its repealed rules if Biden wins, or that Congress will pass a law if Democrats take the Senate in November, the California state senator said. “But we also know that even among Democrats, this issue can be politically hard.” SB-822 ran into obstacles in the legislature despite Democrats controlling both houses (see 1806200048).

Another FCC reversal would take time and “itself be open to challenge by the industry,” said Boston College’s Lyons. “Ultimately, what we need more than anything else is some certainty.”