NY Broadband Affordability Case Raises Preemption Issues

ISPs’ lawsuit against New York’s broadband affordability law raises similar preemption issues to cases industry lost in other venues, but law experts disagreed in interviews which side would win. Plaintiffs at U.S. District Court for Eastern New York (case 21-cv-2389) make the same arguments that failed in Maine ISP privacy and California net neutrality cases, which are “structurally almost identical” to the New York case, argued Stanford Law School professor Barbara van Schewick. Former FCC General Counsel Thomas Johnson countered that 2nd U.S. Circuit Court of Appeals case law gives ISP plaintiffs an “additional arrow in their quiver.”

District Judge Denis Hurley will hear oral argument Thursday on state and national ISP associations seeking to stop New York’s law requiring $15 monthly low-income plans from taking effect June 15. The New York State Telecommunications Association, CTIA, ACA Connects, USTelecom, NTCA and the Satellite Broadcasting and Communications Association brought the suit (see 2105180044). Parties didn’t comment Tuesday.

ISP arguments against New York’s law are strong enough to get a preliminary injunction if the court abides by 2nd Circuit precedent interpreting the Communications Act, said Johnson, now with Wiley Rein. The attorney said Ivy Broadcasting Co. v AT&T, a 1968 case cited by the ISP plaintiffs, said Congress intended in the act for the federal government to occupy the field of interstate service. The California court had to consider 9th Circuit case law, he said.

“No case has found that Congress occupies the entire field of interstate communications,” responded van Schewick, who was involved in developing California’s net neutrality law. The court in the 1968 case said Congress meant to occupy a narrower field than ISPs describe, said the professor, citing the 2nd Circuit ruling that “questions concerning the duties, charges and liabilities of telegraph or telephone companies with respect to interstate communications service are to be governed solely by federal law and that the states are precluded from acting in this area.”

ISPs have a strong conflict preemption argument since ex-Chairman Ajit Pai’s FCC decided in 2018 that broadband is a “more light-touch” Title I service, said Johnson, who defended that net neutrality order before the D.C. Circuit. “That classification represents a conscious policy choice” and remains the rule under the new administration until it decides to reclassify, he said. “It could easily be another year” before that happens since the FCC is 2-2 and a proceeding would have to be completed, he said.

“Until the Democrats move at the FCC” to reclassify broadband, ISPs’ conflict preemption argument is the “clearest win here,” said R Street Resident Fellow Jeffrey Westling. The state policy is a “form of common carriage regulation” but broadband isn’t Title II, he said. Westling disagreed with New York claiming its law is an accessibility law rather than rate regulation. “You’re implementing that by dictating what prices the companies can charge for the service. That’s rate regulation.”

Case law says federal decisions can have preemptive effect only if the federal agency has regulatory authority, but in its 2018 net neutrality order, “the FCC took all these steps to deliberately dismantle all possible sources of authority,” said van Schewick. “The 2018 order created a regulatory vacuum, and you cannot conflict with a vacuum.” The rate regulation argument is “totally irrelevant” because the Act’s common carriage restriction governs only the FCC, the law professor said. When states adopt laws under their police powers, “they are not acting under the Communications Act,” and Section 601 of the 1996 Telecom Act includes “an explicit prohibition on finding implied preemption as a result of provisions added by the 1996 Act,” she said.

“Other states could be emboldened if the 9th Circuit and the 2nd Circuit don’t put a stop to what’s happening in California and New York,” said Johnson. If circuits rule differently, it could create a vehicle for Supreme Court petition about the scope of federal preemption, he said.

ISPs worry about New York "getting a toe under the tent,” said Stop the Cap Director Phillip Dampier. “They don’t want to set a precedent” for more price controls in New York, he said. But the consumer advocate doubts many other states will make similar policies, except possibly California: “Between New York and California, there’s this vast … wasteland of rubber stamps.”

Gov. Andrew Cuomo (D) is talking tough now but probably will agree to “a quiet settlement" under which some ISPs will voluntarily provide such plans, predicted Dampier, noting Cuomo cut a deal with Charter Communications in 2019 after threatening to toss the cable operator out of the state (see 1907110045).